Share the Gain, Share the Pain? Almost Transferable Utility, changes in production possibilities, and bargaining solutions

Elisabeth Gugl and Justin Leroux

No 09-05, Cahiers de recherche from HEC Montréal, Institut d'économie appliquée

Abstract: We consider an n-person economy in which efficiency is independent of distribution but the cardinal properties of the agents’ utility functions preclude transferable utility (a property we call "Almost TU"). We show that Almost TU is a necessary and sufficient condition for all agents to either benefit jointly or suffer jointly with any change in production possibilities under well-behaved generalized utilitarian bargaining solutions (of which the Nash Bargaining and the utilitarian solutions are special cases). We apply the result to household decision making in the context of the Rotten Kid Theorem and in evaluating a change in family taxation.

Keywords: Axiomatic Bargaining; Solidarity; Transferable Utility; Family Taxation; Rotten Kid Theorem (search for similar items in EconPapers)
JEL-codes: C71 D13 D63 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2009-08
New Economics Papers: this item is included in nep-gth
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http://www.hec.ca/iea/cahiers/2009/iea0905_jleroux.pdf (application/pdf)

Related works:
Journal Article: Share the gain, share the pain? Almost transferable utility, changes in production possibilities, and bargaining solutions (2011)
Working Paper: Share the Gain, Share the Pain? Almost Transferable Utility, Changes in Production Possibilities, and Bargaining Solutions (2009)
Working Paper: Share the Gain, Share the Pain? Almost Transferable Utility, Changes in Production Possibilities and Bargaining Solutions (2009)
Working Paper: Share the Gain, Share the Pain? Almost Transferable Utility, Changes in Production Possibilities, and Bargaining Solutions (2007)
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