The purpose of this paper is to propose a new concept of the welfare judgement, named the marginal substitution rate of distribution, and to consider some problems related to this concept.
We sometimes say one dollar for a certain individual is equivalent from the social welfare view point to two dollars for another individual. In this case, one dollar transfer from the second individual to the first increases the “social welfare”. This statement, of course, involves a value judgement. The marginal substitution rate of distribution is the rigorous formulation of this value judgement. That is, when one marginal dollar for an individual is judged to be equivalent from the social welfare judgement, to w marginal dollars for another individual, then the marginal substitution rate of distribution between the latter and the former is defined as w.
We first discuss the relationship between this concept and the Bergson-Samuelson welfare function. For, the latter is the most generally and exactly formulated one among the formulations of welfare judgements ever appeared in the economic sciences. We will show our concept to the Eergson-Samuelson welfare function is the same as the marginal rate of substitution between commodities to the utility index. That is, our concept is a localized one of the Bergson-Samuelson welfare function which is an expression of a global value judgement.
As mentioned above, the concept is the same type of concept as that of the marginal rate of substitution between commodities for an individual. We, therefore, have the same kind of problems as those related to the latter. That is; the problem of the integrability. Since the marginal substitution rate is a “local” concept, it is quite natural that the “global” consistency does not necessarily hold. We also discuss the relationship between the integrability problem for the marginal substitution rate of distribution and the imposibility theorem of the social welfare function by K. J. Arrow.

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The purpose of this paper is empirically clarify the voting behavior of Japanese people at the national election of Representative House and its influence to the public investment in the decade of 1960's, in which the share of supporting vote for the government or the Liberal Democratic Party drastically declined while the Japanese economy recorded a remarkable rapid growth. Based upon the pooling data of nine regions (1966-71) we constructed an econometric model, which consists of three blocks of private economy, voting behavior and public investment by three categories, and contains in total eighteen equations. The estimated equations and simulation studies revealed that the decline of supporting vote in 1960's was mainly caused by the shortage of public investment into the field of direct welfare in urban area, and that the government increased the public investment by 140, 000 yen in rural area and 180, 000-260, 000 yen in urban area to recover each decreasing vote, and that the political cycle through voting and public expenditure equations seems not to exist in Japan, and that the existence of voting system made the public investment bigger and her efficiency lower so that the democratic voting system is not the cheapest system of optimum resource allocation and transfers the financial burden of increased public investment to the hands of furture generations.

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In this paper we investigate the optimal behavior of a monopoly under demand uncertainty by a long run analysis using dynamic programming. The monopoly which we would consider is the kind of price/quantity adjusting firm. Investment the firm undertakes for each period must choose before demand uncertainty is not resolved, and capital stock is determined in the same way. But, labor input for each period is chosen after a stochastic variable and capital stock are known. Then, labor input is determined so as to maximize the short run profit at each period. On the other hand, investment for each period is chosen so as to maximize the expected utility of the sum of discounted net cash flows.
We summarize the outcomes of our analysis below. The risk-averse monopoly does not choose capital stock and labor input at the point of the expected marginal rate of technical substitution equal to the slope of its iso-cost line and, therefore, does not adopt the strategy of the expected cost minimization, that is, the monopoly uses an expected capital-labor ratio less than the efficient ratio. Also the risk-averse monopoly uses a smaller amount of capital stock than the expected cost minimizing amount for the level of output produced. Moreover, the risk-neutral monoply chooses a larger investment and capital stock than the risk-averse monopoly.

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