Characterizing Pareto Improvements in an Interdependent Demand System

  • Peter Kooreman Lambert Schoonbeek
  • Published 2002

Abstract

Interdependent preferences generally imply Pareto inefficiency. For a general demand system, we provide a characterization of Pareto improvements. For a prominent parametric specification, the Linear Expenditure System, we characterize in detail the welfare loss associated with interdependent preferences. Using an estimated empirical model of this kind, we… (More)

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