On the shape of Pareto sets in Edgeworth box economies

William Thomson ()
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William Thomson: University of Rochester

Economic Theory Bulletin, 2023, vol. 11, issue 2, No 2, 190 pages

Abstract: Abstract We study the geometry of the Pareto set in Edgeworth box economies when both agents have continuous, strictly monotonic, strictly convex, smooth, and homothetic preferences. We show that this set is either the diagonal of the box or it is a “doubly visible” curve connecting the origins of the box: imagining the curve to be opaque, an observer standing at either origin is able to see it in its entirety. We also study the case of preferences for which both goods are normal at all prices. In this case, we deduce monotonicity of the Pareto set. We also state a “converse” of each of these statements.

Keywords: Pareto set; Homothetic preferences; Normal goods; Double visibility (search for similar items in EconPapers)
JEL-codes: D51 D60 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s40505-023-00258-2

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