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Interrelated Consumer Preference and Voluntary Exchange

  • Author(s): Bergstrom, Ted
  • et al.
Abstract

This paper presents a model of interrelated preferences for pairs of individuals. It investigates the possibility of an equilibrium with voluntary transactions. It identifies the puzzling case of two people who disagree because each wants the other to have the better part and shows that if this is assumed away, then there exists a competitive equilibrium with voluntary bilateral gifts.

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