A comparative analysis of price, quantity, and mixed approaches for decentralized planning

No one approach is best along all of the four dimensions. The price approach maintains feasibility, where the other two do not necessarily. The quantity approach is coordinable where the other two are not necessarily (and, the price approach only in trivial situations). The mixed approach is very flexible to adapting to existing structures of prices, quantities, and information flows. The other two require specific information flows. And finally, all approaches are improved with rich a priori information. The final selection of an approach must depend upon the relative utilities attached to these four criteria, and that depends upon the particular situation and application. © 1978 The Centre for Russian and East European Studies.

Duke Scholars

Author Richard M. Burton Fuqua School of Business