The Allocation of Resources in the Presence of Indivisibilities
AbstractThe pricing tests for optimality in a convex programming problem are not available when the production possibility set displays economies of scale. The paper argues that indivisibilities in production are one of the major causes of such economies. The constrained optimization problems arising in the presence of indivisibilities are integer programs, and it is proposed that the unique, minimal quantity tests for such problems may shed some light on the internal organization of a large firm.
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Bibliographic InfoPaper provided by Cowles Foundation for Research in Economics, Yale University in its series Cowles Foundation Discussion Papers with number 1068.
Length: 22 pages
Date of creation: Jan 1994
Date of revision:
Publication status: Published in Journal of Economic Perspectives (Fall 1994), 8(4): 111-128
Note: CFP 880.
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Web page: http://cowles.econ.yale.edu/
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Postal: Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA
Other versions of this item:
- Herbert Scarf, 1994. "The Allocation of Resources in the Presence of Indivisibilities," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 111-128, Fall.
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
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