<p>I'm trying to solve the following problem:</p>
<p>Consider an exchange economy with 2 consumers and 2 goods. First, consumer A sets the price, then consumer B maximizes utility according to the price. Then consumer A must make the trade chosen by consumer B.</p>
<p>Now I'm wondering how I should calculate the resulting equilibrium and whether the equilibrium is Pareto optimal. Will consumer A be better off this way, or will consumer A be better off if they both treat prices as given?</p>

CC BY-SA 4.0
2023-10-27T01:16:45.663Z
Here is an example of finding equilibrium and checking for its optimality: https://economics.stackexchange.com/a/56308/11824 Argue that consumer A will be at least as well off this way in comparison to the situation when they both treat prices as given.
Amit
CC BY-SA 4.0
2023-10-27T09:04:10.317Z
Does this answer your question? [General equilibrium with market power](https://economics.stackexchange.com/questions/56297/general-equilibrium-with-market-power)
Giskard
<walrasian>
Pure exchange economy: What if a consumer can set prices?
Ludwig Gershwin
# Pure exchange economy: What if a consumer can set prices?

(Asked by: username_0 on 2023-10-26)

I'm trying to solve the following problem:

Consider an exchange economy with 2 consumers and 2 goods. First, consumer A sets the price, then consumer B maximizes utility according to the price. Then consumer A must make the trade chosen by consumer B.

Now I'm wondering how I should calculate the resulting equilibrium and whether the equilibrium is Pareto optimal. Will consumer A be better off this way, or will consumer A be better off if they both treat prices as given?

**Tags:** walrasian

> **Comments:**
> **username_1**: Here is an example of finding equilibrium and checking for its optimality: https://economics.stackexchange.com/a/56308/11824 Argue that consumer A will be at least as well off this way in comparison to the situation when they both treat prices as given.  
> **username_2**: Does this answer your question? [General equilibrium with market power](https://economics.stackexchange.com/questions/56297/general-equilibrium-with-market-power)  

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