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Monopoly Pricing and Contracts (910 words) |
 | We can see this result intuitively in Figure 1 (we have omitted the autarky indifference curves to avoid cluttering, but the entire core is still represented by the thick fl line segment on the contract curve). |
| This would allow him to be a "perfectly-discriminating" monopolist: he could, via a fully specified contract, drive the other trader back to his autarky indifference curve, and take all the gains-from-trade for himself. |
| Note that, necessarily, the final outcome of such a case would be on the contract curve, and thus Pareto-efficient. |
| eh08.html (1000 words) |
| Hence their indifference curves must be tangential at that point - and hence that point lies on the contract curve. |
| the contract curve - and hence is inefficient. |
| Any Point on Contract Curve can be reached through competitive trading from some (or many) initial endowment point (as long as the preferences are convex). |
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