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.
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Paper provided by Department of Economics, University of Victoria in its series Department Discussion Papers with number
0903.
Length: 23 pages Date of creation: 22 Aug 2009 Date of revision: Handle: RePEc:vic:vicddp:0903
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Find related papers by JEL classification: C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
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