ABSTRACT
To understand the logic of these theories and the questions which they pose, consider an ideal democracy. In this system all citizens have equal income and wealth, and they all vote simultaneously, choosing from a single dimension the level of a government activity. Suppose that merchants of Venice face the choice of how many convoy ships they should build to protect their commercial vessels from pirates. Each citizen seeks to maximize his net benefit from government activities, that is, each votes for the level of activities which maximizes the difference between benefits and costs. The level of protection which is efficient is the level for which the marginal benefit equals the marginal cost. Hence Venetian merchants vote to fund just so many convoy ships that the last one added exactly pays for itself in the benefits of additional protection it provides. It would make no sense for them not to add this ship since the one before still contributed more in protection than in cost; it would make no sense to build more than this ship because the next one would cost more than it contributes.
