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


  • Elisabeth Gugl
  • Justin Leroux


Consider an n-person economy in which efficiency is independent of distribution but the cardinal properties of the agents’ utility functions precludes 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 decisionmaking in the contex of the Rotten Kid Theorem and in evaluating a change in family taxation.

Suggested Citation

  • Elisabeth Gugl & Justin Leroux, 2009. "Share the Gain, Share the Pain? Almost Transferable Utility, Changes in Production Possibilities, and Bargaining Solutions," Cahiers de recherche 0938, CIRPEE.
  • Handle: RePEc:lvl:lacicr:0938

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    References listed on IDEAS

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    Cited by:

    1. Elisabeth Gugl & Linda Welling, 2012. "Time with sons and daughters," Review of Economics of the Household, Springer, vol. 10(2), pages 277-298, June.
    2. Elisabeth Gugl & Justin Leroux, 2015. "The Rotten Kid Theorem and Almost Transferable Utility," CESifo Working Paper Series 5642, CESifo Group Munich.

    More about this item


    Axiomatic Bargaining; Solidarity; Transferable Utility; FamilyT-taxation; Rotten Kid Theorem;

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation

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