Why would a Baron decide to transfer from one group to another? A few reasons I can think of: Some kind of Coaseian payment on externalities paid as compensation The tax receiving set provides some kind of service the tax providing set doesn't (better civic minded behavior?)
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The point is that a rational acting Baron won't just decide to rob Peter to pay Paul - he'll have to have a reason to incur the deadweight loss. The *larger* point is that this is about the best you'll do - trusting a man's judgement who has responsibility for outcomes.
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