Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/119520
Authors: 
Fabella, Raul V.
Year of Publication: 
2014
Series/Report no.: 
Discussion Paper, School of Economics, University of the Philippines 2014-13
Abstract: 
As a proxy for a Pareto-efficient market economy, we adopt the two-party Nash Bargaining model featuring a qualitative bias in the treatment of the contributions of the parties. The Piketty inequality here is the share in total welfare accruing to the richer party over total welfare attained at agreement point. We show that this inequality can never exceed the inequality in initial contributions if the qualitative bias is zero. The rising Piketty inequality requires that the qualitative bias exceed a positive threshold. The Piketty trajectory emerges if the qualitative bias oscillates around the threshold due to changing social and economic environment.
Subjects: 
Piketty
Inequality
Nash Bargaining
JEL: 
C78
D31
D63
D71
Document Type: 
Working Paper

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