A derivation of the coalescence equation is given, stressing the statistical nature of the model and the questionable assumptions that are necessary to ensure its validity. The equation is probably adequate for real clouds, but inadequate when applied to small-volume coalescence experiments in the laboratory. The equation is then extended to include a sedimentation term and results are given for droplet coalescence up to a radius of 50 mu. The distribution of droplets as a function of altitude both within and below a 500-m cloud is also given. After approximately 350 sec there appear to be more large droplets directly below the cloud base than within the cloud proper. Some early results and cautionary statements about the use of continuous collection models above 50 mu are given. 35 pp. Ref.