Effects of Gas Deposits on Edgeworth Box

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Political Economy
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Introduction
Generally, the modeling of stock resources between nations can be indicated by the general
equilibrium model. The discussion compares the gas reservoirs in the United States of America
versus the gas deposits in Australia (Cartwright, 2013 p.87). The USA is believed to have large
gas deposits compared with Australia. The discovery of gas deposits and also oil deposits shows
an increase in the number of gas-related goods. In order to illustrate the modeling of the model
then there is a need to account for the Edgeworth box which represents different distributions of
resources. The box shows the competition equilibrium resulting from two parties. Therefore, the
Edgeworth box serves as the precursor to the bargaining problem of the game theory in the
economy thus giving a numerical solution to cover the subject matter.
Effects of promoting previously unused gas resources by fracking in Edgeworth box
In addition, the effects revealed by the presence of gas deposits in one country shows an increase
in one axis of the box thus shifting equilibrium to the endowment point (Cartwright,2013 p.287).
The shift shows that preference remains unchanged and thus reaching efficient equilibrium. The
structure of preference revealed by the two countries tends to compare economic equilibrium in
providing gas related goods. This shows that both the USA and Australia need to benefit from
the gas reserves. Therefore, the countries will benefit mostly through trade (Davis, 2012 p.76).
Australia has small gas deposits meaning that it will experience the endowment period even after
discovering large deposits. On another hand, the USA will also receive the higher indifference
curve throughout the endowment. If assumptions are taken before the discovery of gas deposits
in the two countries, the equilibrium point will be different. This shows that increased prices of
gas related goods will render the USA to reduce the prices of other products thus affecting the

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economy (Heselhaus, 2018 p.78). The reduced prices of gas related goods in the USA will
reduce the equilibrium point in the box while the curve for Australia continues to grow rapidly.
Countries and goods in the discussion.
The introduction part has clearly indicated the existence of gas deposits in the USA and
Australia. The two countries are ranked differently with the USA on 4th position than the
Australia which is on 18th position. The USA has large wells for the supply of adequate gas
related products and also oil-related products as compared to Australia (Fischer & Pizer, 2017
p.23).
Some of the goods obtained from gas deposits in the two countries include;
The petroleum goods in Australia.
The natural gas in USA.
The two goods that are oil products and natural gas are different between the two nations. The
equilibrium experienced by natural gas in the USA, not the same in Australia. The USA has large
wells that can produce a large number of gas related products. The difference can be achieved by
initiating a module that will target to level the axis in the box.
Effects of the discovery of new gas deposits on Edgeworth box
The two countries tend to possess large deposits of natural gas and petroleum products. The
discovery of new wells will affect the economic equilibrium between the two nations
(Bhattacharya & Akbar, 2012 p.87). Some of the effects of the discovery of new gas deposits
include;

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The increased issue of competitive economics.
New deposits on gas production will ensure that there is a large supply of the products and thus
changing the equilibrium axis in the box. The overall concern and driving force for the
competition is to increase the market price within the country (Bhattacharya & Akbar, 2012
p.87). The change of prices and demand equates the supply chain thus acquiring equilibrium in
the box.
The increased production and exchange between the consumers.
New discovery of gas deposits ensures there is complete economic activity in the nation. The
countries will use the inputs necessary to access the gas products. The box, therefore, will be
affected because it represents different alternatives for different goods. For example, in the figure
below;
Fig 1.The production equilibrium for goods produced by the two nations (Noel, 2018 p.16).