INTENSITY OF PREFERENCES
When there are not enough votes in the dollar voting process, then the product has no scope to survive for a long time in the market. They will disappear from the market. This is based on the intensity of the preferences of the customers.
There is an important aspect of economics called as dollar voting. This happens when the customers are in the position to vote for the products that they choose from a wide range. This is done by paying money and buying the product. These form a major part
These form a major part of deciding whether or not the product stays on the market. These are also called as the preferences of the customers.
The free rider effect:
Though these are reached solely by the customers, there is not much of economic efficiency that is seen in this regard. This can be illustrated with the case of the public goods. In their case, they will stop production of the public goods not because of the preferences of the customers, but due to the free rider effect.
It would be important to have a look at the majority voting and see if it can really lead to results that are economically inefficient in nature. Though many people identify this system of majority voting as the democratic symbol, it is actually one of the many decision rules that are used in making decisions that are political in nature.
Unanimity and majority voting:
There is the concept of unanimity that most of the economists like to talk about. It is the rule that harms only the one that is not to be allowed into the market again. This is a good idea, but for it to happen, there are certain things to be considered. The gainers would be able to buy off from the losers.
This is when the concept of unanimity can hold well. But in the process, there will be problems of bargaining that will ultimately happen. This concept is very rarely used. It does work in smaller groups, but it can never work well in larger groups as such.
In order to reach a decision in this case, in a collective manner, there has to certain things that people would have to compromise. In case they are not compromising, then they have the chances of being outvoted.
Majority working feels better when you come to know about the issues in unanimity. But there are problems in the majority voting too. There would be no equilibrium solution that one would be able to arrive at in these scenarios.