Transfer paradox in a general equilibrium economy: An experimental investigation

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The transfer paradox, whereby a transfer of resources that influences the equilibrium price benefits the donor while harming the recipient, is a classic paradox in general equilibrium theory. This paper pursues an experimental investigation of the transfer paradox using a three-agent pure exchange economy that is predicted to have such a paradox. The results indicate that an endowment adjustment among agents influences the market price, and consequently the donors benefit from the transfer, consistent with the competitive equilibrium theory. When given an option to make a transfer, half of donor agents voluntarily decide to adjust the endowment distribution.

Original languageEnglish
Article number110253
JournalEconomics Letters
Publication statusPublished - 2022 Feb
Externally publishedYes


  • Equilibrium effects
  • Experiments
  • General equilibrium
  • Transfer paradox

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


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