Book contents
- Frontmatter
- Contents
- Preface
- Acknowledgments for reprinted articles
- PART I General introduction
- PART II Economies with a single maximand
- 1 General survey
- 2 Static characterization
- 3 Decentralization within firms
- 4 Dynamic characterization
- 5 The handling of nonconvexities
- PART III Economies with multiple objectives
- PART IV General characterizations of allocation processes
- Appendix: An optimality criterion for decision-making under ignorance
- Author index
- Subject index
- Index of examples
1 - General survey
Published online by Cambridge University Press: 04 April 2011
- Frontmatter
- Contents
- Preface
- Acknowledgments for reprinted articles
- PART I General introduction
- PART II Economies with a single maximand
- 1 General survey
- 2 Static characterization
- 3 Decentralization within firms
- 4 Dynamic characterization
- 5 The handling of nonconvexities
- PART III Economies with multiple objectives
- PART IV General characterizations of allocation processes
- Appendix: An optimality criterion for decision-making under ignorance
- Author index
- Subject index
- Index of examples
Summary
Formulation of the problem
Introduction
In this paper, we wish to discuss the bearing of some recent developments in mathematical economics on the problem of the optimal allocation of resources. We will confine attention here to an economy whose aims are well defined. That is, we assume that the preferences of the economic system can be embodied in a utility function which depends upon the outputs of commodities. For a given technology, the possibilities of different output combinations are restricted by the availabilities of primary resources. The problem of optimal resource allocation is to choose among all the feasible combinations of production processes that combination which maximizes the utility achieved by the economy.
Since the discussion is at a fairly high level of abstraction, the economy being studied may be a nation or some smaller economic system, including a single firm. The assumption that a single utility function represents the objectives of the economy fits best the case of a firm. For a nation, the assumption is less justified, but it provides an introduction, at least, to the more complex problem raised by the presence of many individuals, each of whom judges the workings of the economic system in light of his own utility function. We also avoid the subtle problems involved in defining optimality in the more general case.
The problem of choosing the allocation of primary resources among different productive processes so as to maximize a prescribed utility function is a mathematical one, and its solution in any concrete case can be regarded as a matter of computation.
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- Chapter
- Information
- Studies in Resource Allocation Processes , pp. 41 - 95Publisher: Cambridge University PressPrint publication year: 1977
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