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Advantageous redistribution with three smooth CES utility functions

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  • Kang, Minwook
  • Ye, Lei Sandy

Abstract

We present a parametric example of three-country advantageous redistribution with two Cobb–Douglas utility functions and one CES utility function for which the elasticity of substitution is 1/2. This paper indicates that the possibility of advantageous redistribution strongly depends on the three countries’ taste patterns, endowment distributions, and the elasticity of substitution. In particular, we will show with specific examples that greater difference between the donor and recipient’s taste patterns and a lower elasticity of substitution can increase the chance of advantageous redistribution.

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  • Kang, Minwook & Ye, Lei Sandy, 2016. "Advantageous redistribution with three smooth CES utility functions," Journal of Mathematical Economics, Elsevier, vol. 67(C), pages 171-180.
    • Handle: RePEc:eee:mateco:v:67:y:2016:i:c:p:171-180
    DOI: 10.1016/j.jmateco.2016.08.002
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    References listed on IDEAS

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    4. Kamei, Kenju, 2022. "Transfer paradox in a general equilibrium economy: An experimental investigation," Economics Letters, Elsevier, vol. 211(C).

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