Multiple public goods and lexicographic preferences: Replacement principle (Q1611764)

The problem of locating two public goods for a group of consumers over an interval is considered. Alternatives consist of pairs of locations for the public goods. This problem was first studied by Miyagawa (1998) under the assumption that each agent consumes only his most preferred public good without rivalry. Here preferences are extended lexicographically and a characterization is provided for the class of single-peaked preference rules in terms of Pareto optimality and replacement-domination. The characterization is considerably different from the one given by Miyagawa.