The Traders’ Cross: Identifying Traders’ Surpluses in the Traditional Edgeworth Exchange Diagram

The Edgeworth exchange diagram is a traditional tool of undergraduate microeconomic theory that depicts the mutually beneficial gains from voluntary trade. The authors take the analysis one step further. They identify the buyer's and seller's surpluses that accrue to both trading parties in the Edgeworth diagram. This is a straightforward exercise that has not, however, been developed in microeconomics textbooks, an exercise that can further hone students’ understanding of the concept of buyer's and seller's surpluses and the notion of gains from voluntary exchange.

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