Decentralizing Allocation and Distribution by Separation with Information Transfers

Posted: 8 Jan 2001

See all articles by Jonathan H. Hamilton

Jonathan H. Hamilton

University of Florida - Warrington College of Business Administration - Department of Economics

Steven Slutsky

University of Florida - Department of Economics

Abstract

Governments often divide operations into separate branches that face different constraints and have limited information. Such separation is feasible if each can operate by solving a simple optimization problem using limited information without requiring game-theoretic calculations about others? actions. We specify two structures of one-way information transfers that allow this. For each structure, we present conditions for unified and decentralized decision-making to have identical outcomes. One of them corresponds to using a Samuelson aggregate welfare function that is not always fully efficient. We apply our results to several examples, including public goods and Ramsey pricing.

Suggested Citation

Hamilton, Jonathan H. and Slutsky, Steven M., Decentralizing Allocation and Distribution by Separation with Information Transfers. Available at SSRN: https://ssrn.com/abstract=242020

Jonathan H. Hamilton (Contact Author)

University of Florida - Warrington College of Business Administration - Department of Economics ( email )

Gainesville, FL 32611-7140
United States
352-392-5017 (Phone)
352-392-7860 (Fax)

HOME PAGE: http://people.clas.ufl.edu/hamilton/

Steven M. Slutsky

University of Florida - Department of Economics

PO Box 117165, 201 Stuzin Hall
Gainesville, FL 32610-0496
United States

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