Community indifference curve
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A community indifference curve is an illustration of different combinations of commodity quantities that would bring a whole community the same level of utility. The model can be used to describe any community, such as a town or an entire nation. In a community indifference curve, the indifference curves of all those individuals are aggregated and held at an equal and constant level of utility.
History[]
Invented by Tibor Scitovsky, a Hungarian born economist, in 1941.
Solving for a CIC[]
A community indifference curve (CIC) provides the set of all aggregate endowments needed to achieve a given distribution of utilities, . The community indifference curve can be found by solving for the following minimization problem:
CICs assume allocative efficiency amongst members of the community. Allocative Efficiency provides that . The CIC comes from solving for in terms of , .
Community indifference curves are an aggregate of individual indifference curves.
See also[]
References[]
Albouy, David. "Welfare Economics with a Full Production Economy." Economics 481. Fall 2007.
Deardorff's Glossary of International Economics.
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- Welfare economics