A Production Theory Perspective on Collective Choice Theory

Basic production theory concepts of separability and externalities are used to provide an intuitive, unifying explanation of Arrow's original possibility theorem and later variants of it due to Sen, Wilson, Mas-Colell, and Sonnenschein, of the libertarian paradoxes of Sen and Gibbard, and of the single-profile possibility theorem of Parks. These important results in collective choice theory are shown to be the result of imposing on a multiple-output production process both externality-requiring and externality-denying characteristics. In each of these cases various consistency conditions on social preference and input-output links like citizens' sovereignty or the Pareto principle create external effects in production that interact with an externality-denying characteristic of separability to create a production process with zero marginal input productivity in certain regions of input space.