The Allocation of Resources in the Presence of Indivisibilities
The 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.
|Date of creation:||Jan 1994|
|Publication status:||Published in Journal of Economic Perspectives (Fall 1994), 8(4): 111-128|
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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Herbert E. Scarf, 1990. "Mathematical Programming and Economic Theory," Operations Research, INFORMS, vol. 38(3), pages 377-385, June.
- László Lovász & Herbert E. Scarf, 1992. "The Generalized Basis Reduction Algorithm," Mathematics of Operations Research, INFORMS, vol. 17(3), pages 751-764, August.
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