A fair division of the surplus?

The paper examines a specific approach to the idea of the just price. The approach takes its cue from a basic insight about the nature of exchange, namely, that the latter occurs when both parties to the exchange stand to gain something from it. The distributive question that arises from this observation is how, or according to which principle, we ought to divide such gains. The paper rejects two intuitive answers. The first is that the just price is that at which the gains from exchange are equally distributed between the parties. The second is that the just price is the price at which the party that is worse off prior to the transaction gains as much as possible from it. The problem with the former is that it condones exploitation when one of the two parties is vulnerable. The problem with the latter is that it cannot be plausibly generalized to all transactions. The paper then offers a novel alternative that both preserves the intuitive appeal of the approaches that have been criticized and is able to avoid their weaknesses. This can be achieved by accepting an eclectic distributional ethic with a sufficientarian core.