TY - JOUR
T1 - Transfer paradox in a general equilibrium economy
T2 - An experimental investigation
AU - Kamei, Kenju
N1 - Funding Information:
This project was supported by a grant-in-aid from the Zengin Foundation for Studies on Economics and Finance, Japan . The author thanks Yves Balasko, Roberto Serrano, John Hey, and Kazuya Kamiya, and two anonymous referees, for their valuable comments. The author also thanks John Hey for his hospitality when he conducted the experiment at the University of York, and Mark Wilson for his support in managing the computers and the setup of the z-Tree software in the experimental sessions.
Funding Information:
This project was supported by a grant-in-aid from the Zengin Foundation for Studies on Economics and Finance, Japan. The author thanks Yves Balasko, Roberto Serrano, John Hey, and Kazuya Kamiya, and two anonymous referees, for their valuable comments. The author also thanks John Hey for his hospitality when he conducted the experiment at the University of York, and Mark Wilson for his support in managing the computers and the setup of the z-Tree software in the experimental sessions.
Publisher Copyright:
© 2021 Elsevier B.V.
PY - 2022/2
Y1 - 2022/2
N2 - 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.
AB - 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.
KW - Equilibrium effects
KW - Experiments
KW - General equilibrium
KW - Transfer paradox
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U2 - 10.1016/j.econlet.2021.110253
DO - 10.1016/j.econlet.2021.110253
M3 - Article
AN - SCOPUS:85123075993
SN - 0165-1765
VL - 211
JO - Economics Letters
JF - Economics Letters
M1 - 110253
ER -