Information, Incentives and the Economics of Control [Paperback]

This 1992 book examines alternative methods for achieving optimality without all the apparatus of economic planning.This 1992 book examines alternative methods for achieving optimality without all the apparatus of economic planning (such as information retrieval, computation of solutions, and separate implementation systems), or a vain reliance on sufficiently 'perfect' competition. All rely entirely on the self-interest of economic agents and voluntary contract.This 1992 book examines alternative methods for achieving optimality without all the apparatus of economic planning (such as information retrieval, computation of solutions, and separate implementation systems), or a vain reliance on sufficiently 'perfect' competition. All rely entirely on the self-interest of economic agents and voluntary contract.This book examines methods for controlling or guiding a sector of the economy that do not require all the apparatus of economic planning or rely on the vain hope of sufficiently perfect competition, but instead rely entirely on the self-interest of economic agents and voluntary contract. The methods involved require trial-and-error steps in real time, with the target adjusted as the results of each step become known. The author shows that the methods are equally applicable to industries that are wholly privately owned, wholly nationalized, mixed or labor-managed.Preface; Part I. Introductory: 1. Two preliminary matters; 2. Extended preferences; Part II. Iterative Controls: 3. Feedback control processes; 4. First example: an externality problem; 5. Second application of the control process: Lerner's problem; 6. Third example of the control process: implementation of a second-best solution; 7. Two examples of the control process in a mixed economy; Part III. Non-convexities: 8. Non-convexities in the technology; 9. Non-convexity and optimal product choice; Part IV. Cooperatives: 10. Pareto-improvements and cooperatives; 11. Achieving pareto-efficiency in the LMF; ló2