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Coordination in Centralized and Decentralized Systems

Author

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  • Vipin P Veetil

    (Centre d?economie de la Sorbonne, Paris, France.)

Abstract

We study a simple coordination problem to understand the difference between centralized and decentralized economic systems. The decentralized system is more robust than the centralized system to communication errors. But the centralized system takes less time than the decentralized system to create coordination among constituent parts. Decentralization is preferable when the constituent parts are more likely to make communication errors, when there is little urgency, and when there is need to prevent system-collapse.

Suggested Citation

  • Vipin P Veetil, 2017. "Coordination in Centralized and Decentralized Systems," International Journal of Microsimulation, International Microsimulation Association, vol. 10(2), pages 86-102.
    • Handle: RePEc:ijm:journl:v10:y:2017:i:2:p:86-102
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    References listed on IDEAS

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    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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