The relationship between economic welfare and the number of firms in a quasi-Cournot market is examined. In the first place, we presuppose the existence of a strong ("first-best") government that can enforce the marginal-cost principle to the firms along with regulating the number of firms. It is shown that there exist excessive number of firms at the free-entry quasiCournot equilibrium vis-a-vis the "first-best" welfare maximizing number of firms. The thrust of this result essentially survives even if we replace a utopian "first-best" government by a "secondbest" government that leaves the firms to pursue their respective profit maximization freely and engages solely in regulating the number of firms. It can be shown that the excess entry prevails again in this "second-best" world.
Left freely to themselves, a group of rational individuals often fail to cooperate even when the product of social cooperation is beneficial to all. Hence, the author argues, a rule of collective decision making is clearly needed that specifies how social cooperation should be organised among contributing individuals. Suzumura gives a systematic presentation of the Arrovian impossibility theorems of social choice theory, so as to describe and enumerate the various factors that are responsible for the stability of the voluntary association of free and rational individuals. Among other topics covered are an axiomatic characterisation of the concept of a rational choice, the simple majority decision rule and its extensions, the social choice implications of the concept of equity as nonenvy, the constrained majoritarian collective choice rules and the conflict between the Paretian ethics and the libertarian claims of individual rights.
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