The Edgeworth Box

Requires a Wolfram Notebook System

Interact on desktop, mobile and cloud with the free Wolfram CDF Player or other Wolfram Language products.

Requires a Wolfram Notebook System

Edit on desktop, mobile and cloud with any Wolfram Language product.

The Edgeworth box is a traditional visualization of the benefits potentially available from trade. The idea is to take some starting allocation of goods between two individuals (A and B) and determine the set of reallocations that could benefit both of them. Shown in this Demonstration as a blue region, this set is known as "the core". The locus of allocations that are "Pareto optimal" is known as the "contract curve", shown here in green. Pareto optimal allocations are those for which no changes would benefit both individuals. You can set the preferences of both individuals and relocate the starting allocation by dragging it. For each Edgeworth box, this Demonstration also shows (in the bottom graph) the utility of A and B along the contract curve ("the Pareto frontier"), the utility they possess at the starting allocation, and a mapping of the core into the "utility space".

Contributed by: Seth J. Chandler (March 2011)
Open content licensed under CC BY-NC-SA


Snapshots


Details

detailSectionParagraph


Feedback (field required)
Email (field required) Name
Occupation Organization
Note: Your message & contact information may be shared with the author of any specific Demonstration for which you give feedback.
Send