Edgeworth's Paradox Revisited

11 Pages Posted: 5 Nov 2024

See all articles by Cuihong Fan

Cuihong Fan

Shanghai University of Finance and Economics

Byoung Heon Jun

Korea University

Elmar G. Wolfstetter

Humboldt University of Berlin - Faculty of Economics; Korea University - College of Economics and Commerce; CESifo (Center for Economic Studies and Ifo Institute)

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

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

Cuihong Fan

Shanghai University of Finance and Economics ( email )

777 Guoding Road
Shanghai, AK Shanghai 200433
China

Byoung Heon Jun

Korea University ( email )

Korea, Republic of (South Korea)

HOME PAGE: http://econ.korea.ac.kr/new2/prof/prof.php?profid=bhjun

Elmar G. Wolfstetter (Contact Author)

Humboldt University of Berlin - Faculty of Economics ( email )

Institut für Wirtschaftstheorie I
Spandauer Strasse 1
Berlin
Germany
+49 30 2093 5652/3 (Phone)
+49 30 2093 5619 (Fax)

HOME PAGE: http://sites.google.com/view/wolfstetter/home

Korea University - College of Economics and Commerce ( email )

Anam-dong, Sungbuk-Ku
Seoul, 136-701
Korea

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

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