Question: f. Write down individual 1s budget constraint when he is assigned e3 in property rights. (Hint: If x1 , e1 , individual 1 will earn

f. Write down individual 1’s budget constraint when he is assigned e3 in property rights. (Hint:

If x1 , e1

, individual 1 will earn p3 1e3 2 x1 2 but if x1 . e1

, he will have to pay p3 1x1 2 e3 2

which is equivalent to saying he will earn p3 1e3 2 x1 2.)

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