Skip to main content

Destruction in Exchange EconomicesEconomies

edited title
Link
FooBar
  • 10.8k
  • 1
  • 30
  • 60

How can destroying my property make me better off? Destruction in Exchange Economices

Source Link

How can destroying my property make me better off?

I am reading about exchange economies and ran across something that is counter intuitive.

How is it that in an exchange economy with no production that a person can make himself/herself better off by destroying a portion of his or her endowment? If there is no production how, in the long run, is a person better off destroying some of the available resource if that resource can't be replaced etc.?

Can anyone illustrate this in a simple manner to help with the intuition?

I know that if there could be some way that destroying a bit of a resource can drive up prices such that the remaining quantity is now more valuable than the original quantity at original prices. Is that what is happening here? If so, why and how?