Nonlinear pricing in a finite economy

Roger GUESNERIE, Jesús SEADE

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

77 Citations (Scopus)

Abstract

We study majority voting over a bidimensional policy space when the voters' type space is either uni- or bidimensional. We show that a Condorcet winner fails to generically exist even with a unidimensional type space. We then study two voting procedures widely used in the literature. The Stackelberg (ST) procedure assumes that votes are taken one dimension at a time according to an exogenously specified sequence. The Kramer-Shepsle (KS) procedure also assumes that votes are taken separately on each dimension, but not in a sequential way. A vector of policies is a Kramer-Shepsle equilibrium if each component coincides with the majority choice on this dimension given the other components of the vector. We study the existence and uniqueness of the ST and KS equilibria, and we compare them, looking e.g. at the impact of the ordering of votes for ST and identifying circumstances under which ST and KS equilibria coincide. In the process, we state explicitly the assumptions on the utility function that are needed for these equilibria to be well behaved. We especially stress the importance of single crossing conditions, and we identify two variants of these assumptions: a marginal version that is imposed on all policy dimensions separately, and a joint version whose definition involves both policy dimensions.
Original languageEnglish
Pages (from-to)157-159
Number of pages3
JournalJournal of Public Economics
Volume17
Issue number2
DOIs
Publication statusPublished - 1 Mar 1982
Externally publishedYes

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Nonlinear pricing
Stackelberg
Vote
Condorcet winner
Voting
Utility function
Voters
Single-crossing condition
Uniqueness
Majority voting

Cite this

GUESNERIE, Roger ; SEADE, Jesús. / Nonlinear pricing in a finite economy. In: Journal of Public Economics. 1982 ; Vol. 17, No. 2. pp. 157-159.
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Nonlinear pricing in a finite economy. / GUESNERIE, Roger; SEADE, Jesús.

In: Journal of Public Economics, Vol. 17, No. 2, 01.03.1982, p. 157-159.

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

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