On the transfer and advantageous reallocation paradoxes

It is well known that the transfer and advantageous reallocation paradoxes cannot occur at a Walrasian stable equilibrium in a two agent economy. In an influential recent paper Chichilnisky provided an example of the transfer paradox in the context of a globally Walrasian stable three agent economy. It is evident, though, that the paradoxes depend on the underlying data-tastes, preferences and net export positions-of the economy. This paper characterizes and generalizes the transfer and advantageous reallocation paradoxes: necessary and sufficient conditions on the underlying data of a globally Walrasian stable economy for the occurence of each of these paradoxes are established; the key role of the third agent in generating these paradoxes is clarified.