First-Degree Discrimination in a Competitive Setting: Pricing and Quality Choice

The paper investigates competition in price schedules among vertically differentiated dupolists. First order price discrimination is the unique Nash equilibrium of a sequential game in which firms determine first whether or not to commit to a uniform price, and then simultaneously choose either a single price of a price schedule. Whether the profits earned by both firms are larger or smaller under discrimination than under uniform pricing depends on the quality gap between firms, and on the disparity of consumer preferences. Firms engaged in first degree discrimination choose quality levels that are optimal from a welfare perspective. The paper also reflects on implications of these findings for pricing policies of an incumbent threatened by entry.

Rational Choice on Arbitrary Domains: A Comprehensive Treatment

The rationalizability of a choice function on arbitrary domains by means of a transitive relation has been analyzed thoroughly in the literature. Moreover, characterizations of various versions of consistent rationalizability have appeared in recent contributions. However, not much seems to be known when the coherence property of quasi-transitivity or that of P-acyclicity is imposed on a rationalization. The purpose of this paper is to fill this significant gap. We provide characterizations of all forms of rationalizability involving quasi-transitive or P-acyclical rationalizations on arbitrary domains.

Domain Closedness Conditions and Rational Choice

The rationalizability of a choice function on an arbitrary domain under various coherence properties has received a considerable amount of attention both in the long-established and in the recent literature. Because domain closedness conditions play an important role in much of rational choice theory, we examine the consequences of these requirements on the logical relationships among different versions of rationalizability. It turns out that closedness under intersection does not lead to any results differing from those obtained on arbitrary domains. In contrast, closedness under union allows us to prove an additional implication.

Social Choice: Recent Developments

In the past quarter century, there has been a dramatic shift of focus in social choice theory, with structured sets of alternatives and restricted domains of the sort encountered in economic problems coming to the fore. This article provides an overview of some of the recent contributions to four topics in normative social choice theory in which economic modelling has played a prominent role: Arrovian social choice theory on economic domains, variable-population social choice, strategy-proof social choice, and axiomatic models of resource allocation.

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Social Norms and Rationality of Choice

Ever since Sen (1993) criticized the notion of internal consistency of choice, there exists a wide spread perception that the standard rationalizability approach to the theory of choice has difficulties coping with the existence of external social norms. This paper introduces a concept of norm-conditional rationalizability and shows that external social norms can be accommodated so as to be compatible with norm-conditional rationalizability by means of suitably modified revealed preference axioms in the theory of rational choice on general domains à la Richter (1966;1971) and Hansson (1968)

Infinite-Horizon Choice Functions

We analyze infinite-horizon choice functions within the setting of a simple linear technology. Time consistency and efficiency are characterized by stationary consumption and inheritance functions, as well as a transversality condition. In addition, we consider the equity axioms Suppes-Sen, Pigou-Dalton, and resource monotonicity. We show that Suppes-Sen and Pigou-Dalton imply that the consumption and inheritance functions are monotone with respect to time—thus justifying sustainability—while resource monotonicity implies that the consumption and inheritance functions are monotone with respect to the resource. Examples illustrate the characterization results.

A Characterization of Consistent Collective Choice Rules

We characterize a class of collective choice rules such that collective preference relations are consistent. Consistency is a weakening of transitivity and a strengthening of acyclicity requiring that there be no cycles with at least one strict preference. The properties used in our characterization are unrestricted domain, strong Pareto, anonymity and neutrality. If there are at most as many individuals as there are alternatives, the axioms provide an alternative characterization of the Pareto rule. If there are more individuals than alternatives, however, further rules become available.

Non-Deteriorating Choice without Full Transitivity

Although the theory of greatest-element rationalizability and maximal-element rationalizability under general domains and without full transitivity of rationalizing relations is well-developed in the literature, these standard notions of rational choice are often considered to be too demanding. An alternative definition of rationality of choice is that of non-deteriorating choice, which requires that the chosen alternatives must be judged at least as good as a reference alternative. In game theory, this definition is well-known under the name of individual rationality when the reference alternative is construed to be the status quo. This alternative form of rationality of individual and social choice is characterized in this paper on general domains and without full transitivity of rationalizing relations.