How Much Trade Does the Transfer Paradox Require? The Threshold Computed

Transfer paradox in a general equilibrium economy: An experimental investigation

“…This study employed a simple standard framework discussed in the theoretical literature. A three-agent pure exchange economy was selected as the basis of experiments, since the transfer paradox is theoretically a rare phenomenon in a two-agent pure exchange economy (Turner, 2016).…”

“…The transfer paradox is a well-known phenomenon in which an adjustment in endowments among agents may benefit the donors while harming the recipients. This paradox arises from the impact that the endowment transfer has on equilibrium prices, which alters the situation to the donors' advantage (Turner, 2016). The transfer paradox was first discussed in Leontief (1936), and has been studied by a number of scholars (e.g., Samuelson, 1947;Gale, 1974;Aumann and Peleg, 1974;Polemarchakis, 1983;Yano, 1983;Rao, 1992;Ye, 2014, 2016;Dubey and Kang, 2019).…”

“…This setup was chosen for simplicity. A transfer paradox can emerge with other functional forms such as Cobb-Douglas and quasilinear theoretically(Turner, 2016).…”