Community indifference curve


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 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.