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Share the Gain, Share the Pain? Almost Transferable Utility, Changes in Production Possibilities and Bargaining Solutions

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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.

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Bibliographic Info

Paper provided by Department of Economics, University of Victoria in its series Department Discussion Papers with number 0903.

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Length: 23 pages
Date of creation: 22 Aug 2009
Date of revision:
Handle: RePEc:vic:vicddp:0903

Note: ISSN 1914-2838
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Web page: http://web.uvic.ca/econ
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Keywords: Axiomatic bargaining; Solidarity; Transferable utility; Family taxation; Rotten Kid Theorem;

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  1. Gerber, Anke & Upmann, Thorsten, 2006. "Bargaining solutions at work: Qualitative differences in policy implications," Mathematical Social Sciences, Elsevier, Elsevier, vol. 52(2), pages 162-175, September.
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  7. Anbarci, N. & Skaperdas, S. & Syropoulos, C., 2000. "Comparing Bargaining Solutions in the Shadow of Conflict: How Norms Against Threats Can Have Real Effects," Papers, California Irvine - School of Social Sciences 00-01-19, California Irvine - School of Social Sciences.
  8. Xu, Yongsheng & Yoshihara, Naoki, 2006. "The behavior of solutions to bargaining problems on the basis of solidarity," Discussion Paper Series, Institute of Economic Research, Hitotsubashi University a474, Institute of Economic Research, Hitotsubashi University.
  9. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780195102680, October.
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  16. Rubalcava, L. & Thomas, D., 2000. "Family Bargaining and Welfare," Papers, RAND - Labor and Population Program 00-10, RAND - Labor and Population Program.
  17. Shelly J. Lundberg & Robert A. Pollak & Terence J. Wales, 1997. "Do Husbands and Wives Pool Their Resources? Evidence from the United Kingdom Child Benefit," Journal of Human Resources, University of Wisconsin Press, vol. 32(3), pages 463-480.
  18. Bergstrom, Theodore C, 1989. "A Fresh Look at the Rotten Kid Theorem--and Other Household Mysteries," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 97(5), pages 1138-59, October.
  19. Matthias Wrede, 2003. "The Income Splitting Method: Is it Good for Both Marriage Partners?," German Economic Review, Verein für Socialpolitik, Verein für Socialpolitik, vol. 4(2), pages 203-216, 05.
  20. Elisabeth Gugl, 2009. "Income splitting, specialization, and intra-family distribution," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 42(3), pages 1050-1071, August.
  21. Nicolo, Antonio & Perea, Andres, 2005. "Monotonicity and equal-opportunity equivalence in bargaining," Mathematical Social Sciences, Elsevier, Elsevier, vol. 49(2), pages 221-243, March.
  22. Chun, Youngsub & Thomson, William, 1988. "Monotonicity properties of bargaining solutions when applied to economics," Mathematical Social Sciences, Elsevier, Elsevier, vol. 15(1), pages 11-27, February.
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Cited by:
  1. Elisabeth Gugl & Linda Welling, 2012. "Time with sons and daughters," Review of Economics of the Household, Springer, Springer, vol. 10(2), pages 277-298, June.

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