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Abstract
The Coase theorem and the Rotten–Kid theorem are compared against each other in a simplified model of altruism and externalities. The efficiency predictions of the Coase theorem are found to be unaltered by the altruism, whereas those of the Rotten–Kid theorem are found to be applicable only to a more specialized type of social-welfare function.
Acknowledgements
Gratitude is extended to Valerie Alcala, Shichen Sandra Cao, John MacCormick and the School of Government at Victoria University of Wellington.