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A Simple Model Of Private Firms In A Centrally Planned Economy

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  • Berkowitz, Daniel

Abstract

This paper models the behavior of private firms in a parallel consumer goods market. The state sector is characterized by a fixed quantity, quality and price of output while the private sector strategically chooses its quality and quantity. The private sector response to a marginal cut-back in state provision of consumer goods is analyzed for the possible regimes of an excess-demand equilibrium. It is shown that this cut-back, unaccompanied by transfers of assets or materials to the private sector, may increase public welfare.

Suggested Citation

  • Berkowitz, Daniel, 1991. "A Simple Model Of Private Firms In A Centrally Planned Economy," SSRI Workshop Series 292710, University of Wisconsin-Madison, Social Systems Research Institute.
    • Handle: RePEc:ags:uwssri:292710
    DOI: 10.22004/ag.econ.292710
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    Research Methods/ Statistical Methods;

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