No loss rule in standard microeconomic framework.
Authors:
Zsolt Gilanyi, Katalin Martinas
A generalised version of the standard microeconomic utility maximising model is given
by relaxing the maximisation rule to the no loss rule, and then it is applied to solve
some paradoxes. In the model the transaction cost theory naturally appears permitting to
explain the threshold effect. A net demand correspondence depending on the value-price
difference is deduced which permits to introduce a parameter, specific to the
"situation", by which phenomena, like the paradox of Pearce, can be explained.
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