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Contract curve

From Wikipedia, the free encyclopedia

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Blue contract curve showing tangential intersections of indifference curves on an Edgeworth box
Blue contract curve showing tangential intersections of indifference curves on an Edgeworth box

Given some endowment in an Edgeworth box, the contract curve is the individually rational subset of the Pareto set. In other words, it is the set of Pareto efficient points such that both agents are at least as well off as under their endowment.

See welfare economics and list of economics topics.

[edit] References

Mas-Colell, Andreu; Whinston, Michael D.; & Green, Jerry (1995). Microeconomic Theory. New York: Oxford University Press. ISBN 0-19-510268-1


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