Transfer paradox in a stable equilibrium
- 47 Downloads
The transfer paradox describes the situation in which transfers of initial endowments within competitive market make the donor better off and (or) the recipient worse off. Advantageous redistribution, strong transfer paradox, and Chichilnisky paradox are the three cases of the transfer paradox in a stable equilibrium, wherein each case produces a different welfare outcome. This paper shows that the three paradoxes are concretely related by applying Kaldor welfare measure.
KeywordsAdvantageous redistribution Chichilnisky Paradox Strong Paradox
JEL ClassificationD50 F20
- Bhagwati, J.N., Brecher, R.A., Hatta, T.: The generalized theory of transfers and welfare: bilateral transfers in a multilateral world. Am. Econ. Rev. 73(4), 606–618 (1983)Google Scholar
- Kang, M., Rasmusen, E.: The transfer paradox. (2016). Accessed 7 Oct 2018Google Scholar
- Mundell, R.A.: The pure theory of international trade. Am. Econ. Rev. 50, 67–110 (1960)Google Scholar