Community indifference curve

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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.

Invented by Tibor Scitovsky, a Hungarian born economist, in 1941.

A community indifference curve (CIC) provides the set of all aggregate endowments ${\displaystyle ({\bar {x}},{\bar {y}})=(x_{1}+x_{2},y_{1},+y_{2})}$ needed to achieve a given distribution of utilities, ${\displaystyle ({\bar {u_{1}}},{\bar {u_{2}}})}$. 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 ${\displaystyle MRS_{1}xy=MRS_{2}xy}$. The CIC comes from solving for ${\displaystyle {\bar {y}}}$ in terms of ${\displaystyle {\bar {x}}}$, ${\displaystyle y_{cic}({\bar {x}})}$.

Community indifference curves are an aggregate of individual indifference curves.

• Indifference curve

• Albouy, David. "Welfare Economics with a Full Production Economy." Economics 481. Fall 2007.
• Deardorff's Glossary of International Economics.

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