- Research Article
5
- 10.2307/3439570
A Note on a Weitzman-Like Planning Procedure
- Jan 01, 1977
- The Scandinavian Journal of Economics
- Børge Obel + 1 more +1
For the past fifteen years, formalized procedures for economic planning have been the subject of intensive research. Underlying much of this research has been the analogy between planning procedures and decomposition algorithms from mathematical programming. Some authors, e.g. Baumol & Fabian (1964) and Burton et al. (1974), have interpreted certain decomposition algorithms as models of decentralized planning. Other authors, e.g. Jennergren (1971), have stated a planning problem and then gone on to find a decomposition algorithm which could serve as a procedure for solving their problem. Still other authors have constructed new planning procedures drawing on constructs and concepts from mathematical programming; see e.g. Rasmusen (1974), Malinvaud (1967) and Weitzman (1970). For recent surveys of planning procedures, see Heal (1973), Hurwicz (1973) and Ruefli (1974). The procedure outlined by Weitzman (1970) is generally regarded as attrac. tive from a planning point of view; see, e.g. Portes (1971). For one thing (and as distinguished from many other proposals) it is not too dissimilar from procedures actually used in economic systems, in particular as regards information flows between organizational units participating in the planning process. Although the procedure suggested by Weitzman appears to be promising for actual planning problems, it has some limitations. These are due to the fact that the procedure cannot be used in connection with (a) joint productions and (b) non-negative constraints, and that the central unit's estimate of the production set must contain the production set. That (a) and (b) really restrict the application of the procedure is obvious.
Read more