A comparative analysis of price, quantity, and mixed approaches for decentralized planning

✍ Scribed by Richard M. Burton; Børge Obel

• Book ID: 104742824
• Publisher: Springer US
• Year: 1978
• Tongue: English
• Weight: 810 KB
• Volume: 14
• Category: Article
• ISSN: 1573-9414
• DOI: 10.1007/bf00367143

✦ Synopsis

It is a continuing controversy in economics whether prices, quantities, or both can be, and should be used to coordinate large scale economic systems. In his critique of three Swedish planning systems, Jennergren (1971) concluded that the intuitively appealing rules of price and allocation adjustment would not work in the linear programming framework. More complex approaches are required. Using a multilevel decomposition model for the multidivisional firm, or multisector for economy, we compare three more complex approaches for coordinated planning which can yield optimal solutions. Several criteria which go beyond optimality are developed: feasibility, coordinability, flexibility, and the use of a priori information. These criteria serve as the basis for our comparison.