Edgeworth Box

Two-person exchange economy — indifference curves, contract curve, and Pareto improvements

Preferences

Drag the endowment point (yellow dot) on the canvas

A's indifference curves
B's indifference curves
Contract curve (Pareto set)
Endowment point
Edgeworth box: a graphical representation of all possible allocations of two goods between two people. Person A's origin is the bottom-left; Person B's origin is the top-right. The contract curve (Pareto set) traces all Pareto-efficient allocations, where MRS_A = MRS_B.

For Cobb-Douglas preferences U = x^α · y^(1-α), the contract curve is a straight line. Points inside the lens between the two indifference curves through the endowment represent Pareto improvements — both parties can gain from trade. The competitive equilibrium lies on both the contract curve and the budget line through the endowment.