Open AccessOn luxury and Equilibrium
Author(s) -
Andrea Mantovi
Publication year - 2015
Publication title -
review of economic analysis
Language(s) - English
Resource type - Journals
ISSN - 1973-3909
DOI - 10.15353/rea.v6i2.1414
Subject(s) - mathematical economics , uniqueness , economics , simple (philosophy) , monotone polygon , pareto principle , comparative statics , general equilibrium theory , mathematics , microeconomics , mathematical analysis , operations management , philosophy , geometry , epistemology
Building on a class of transcendental preferences for luxury, explicit solutions for price taking behavior and exchange equilibrium are discussed, which share the analytical tractability of Cobb-Douglas models. Such economies display fundamental positive properties, among which uniqueness and price tâtonnement stability of equilibrium. The monotone comparative statics of the luxury effect is discussed. Pareto sets admit a simple characterization, which generalizes the one set forth by Afriat (1987) so that a richer phenomenology is embraced. Potential lines of progress are envisaged.