Download This PaperEdgeworth's Paradox Revisited
11 Pages Posted: 5 Nov 2024
Date Written: September 23, 2024
Abstract
The literature on Edgeworth's paradox, from the seminal contributions by Edgeworth (1925) and Hotelling (1932) to the recent analysis by Armstrong and Vickers (2023), focuses on a restrictive market structure, a monopoly, and assumes symmetry of the Jacobian matrix of inverse demand functions. In this study, we relax the symmetry assumption, consider general non-linear demand and, in the case of monopoly, general non-linear cost functions, and establish the necessary and sufficient conditions for the paradox to occur in oligopoly settings, which encompass monopoly as a special case.
Keywords: Multi-product firms, oligopoly, monopoly, tax incidence
JEL Classification: D42, D43, H22, L12, L13, D21
Suggested Citation: Suggested Citation
Fan, Cuihong and Jun, Byoung Heon and Wolfstetter, Elmar G., Edgeworth's Paradox Revisited (September 23, 2024). Available at SSRN: https://ssrn.com/abstract=4966330 or http://dx.doi.org/10.2139/ssrn.4966330
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