Taste Asymmetries and Trade Patterns
AbstractWe study trade patterns in a pure exchange economy where preferences are symmetric up to taste intensity parameters. In a 2-person, 2-good endowment economy, then all endowments in a particular Edgeworth box rectangle require trading out of that rectangle. Under strictly quasi-concave preferences, trade will occur away from a larger area of initial endowments. The identified area is larger still when preferences are homothetic and identical up to taste intensity parameters. Implications for the factor price equalization theorem are explored.
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Bibliographic InfoPaper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 10040.
Date of creation: 20 Sep 2002
Date of revision:
Publication status: Published in Economics Bulletin, June 2003, vol. 4
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Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
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Web page: http://www.econ.iastate.edu
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Other versions of this item:
- D5 - Microeconomics - - General Equilibrium and Disequilibrium
- F0 - International Economics - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-09-28 (All new papers)
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