Edgeworth Paradox

Edgeworth Paradox

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Medium:  Paradox
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Release Message:  With capacity constraints, there may not be an equilibrium.
Description:  In economics, the Edgeworth paradox describes a situation in which two players cannot reach a state of equilibrium with pure strategies, i.e. each charging a stable price. Suppose two companies, A and B, sell an identical commodity product, and that customers choose the product solely on the basis of price. Each company faces capacity constraints, in that on its own it cannot satisfy demand at its zero-profit price, but together they can more than satisfy such demand. Francis Ysidro Edgeworth (F. Y.)