Animal welfare assumes a certain relevance within a farm context in the European Union through the Common Agricultural Policy (CAP). In the face of a wide range of animal welfare legislation enacted in Europe since the 1970s, also following ambitious public and private debates sometimes...

Within a general equilibrium model, this paper identifies a novel animal welfare externality that occurs if the private animal friendliness in a market economy falls short of the social animal friendliness used by the social planner when determining the efficient allocation. The animal welfare...