Efficienza dello scambio: guadagni dal commercio I

To evaluate whether resource allocations are efficient, it is essential to understand the preferences of the individuals involved. Indifference curves are used to represent these preferences, and they can be incorporated into an Edgeworth Box.

Taylor’s indifference curves are convex toward her origin, while Alex’s curves are convex toward his. Higher curves represent higher utility levels for both individuals. 

Let’s consider an arbitrary point A within the Edgeworth Box. 

Is this point a Pareto-efficient allocation? The key question is whether it is possible to redistribute the goods in a way that makes both Taylor and Alex better off. At point A, such redistribution is indeed possible. 

Both Taylor and Alex have indifference curves passing through point A. Any allocation that gives Taylor more goods and lies above and to the right of this IC​ increases her utility. Similarly, allocations below and to the left of this IC​ would increase Alex’s utility. 

This shaded region between these ICs represents all possible redistributions that improve both individuals' utilities. As a result, point A is not a Pareto-efficient allocation.