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Taste Asymmetries and Trade Patterns

  • Hennessy, David A.
  • Lapan, Harvey E.

We 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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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 10040.

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Date of creation: 20 Sep 2002
Date of revision:
Publication status: Published in Economics Bulletin, June 2003, vol. 4
Handle: RePEc:isu:genres:10040
Contact details of provider: Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
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  1. Samuelson, Paul A & Swamy, S, 1974. "Invariant Economic Index Numbers and Canonical Duality: Survey and Synthesis," American Economic Review, American Economic Association, vol. 64(4), pages 566-93, September.
  2. Yves Balasko, 1988. "Equivariant General Equilibrium Theory," Research Papers by the Institute of Economics and Econometrics, Geneva School of Economics and Management, University of Geneva 88.05, Institut d'Economie et Econométrie, Université de Genève.
  3. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680, July.
  4. Herings P. Jean-Jacques & Peeters R., 1999. "A Differentiable Homotopy to Compute Nash Equilibria of n-Person Games," Research Memorandum 038, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  5. Hennessy, David A. & Lapan, Harvey E., 2003. "Technology Asymmetries, Group Algebra and Multi-Plant Cost Minimization," Staff General Research Papers 5103, Iowa State University, Department of Economics.
  6. Chambers,Robert G. & Quiggin,John, 2000. "Uncertainty, Production, Choice, and Agency," Cambridge Books, Cambridge University Press, number 9780521622448.
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