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On luxury and equilibrium

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  • A. Mantovi

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Abstract

Building on a class of transcendental preferences for luxury, explicit solutions for price taking behavior and exchange equilibrium are discussed, which share the analytical tractability of Cobb-Douglas models and display positive relevance, along the lines discussed by Freixas and Mas-Colell (1987). The monotone comparative statics of the luxury effect is discussed. Pareto sets admit a simple characterization which generalizes the one set forth by Afriat (1987) for Cobb-Douglas exchange economies. Potential lines of progress are envisaged.

Suggested Citation

  • A. Mantovi, 2014. "On luxury and equilibrium," Economics Department Working Papers 2014-EP02, Department of Economics, Parma University (Italy).
  • Handle: RePEc:par:dipeco:2014-ep02
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    References listed on IDEAS

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    More about this item

    Keywords

    Edgeworth Box; General Equilibrium; Luxury; Necessity; Comparative Statics; Pareto Set;

    JEL classification:

    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

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