Balanced Growth in Decentralized Economies

  • Alexander P. Abramov
Chapter
First Online:
Part of the Lecture Notes in Economics and Mathematical Systems book series (LNE, volume 672)

Abstract

In this chapter, we consider decision making algorithms that ensure balanced growth in decentralized economic systems. We assume that the economic system under consideration consists of a finite number monoproduct sectors whose outputs in any time period are defined by Leontief production functions. We show that there exists a dynamic system of prices where all the sectors ensure balanced growth for the whole economic system by aiming to maximize their profit. Prices have the following characteristic property: They depend on the volume of production so that the price of a product goes down as its output grows. The dependencies under consideration ensure that profit is a unimodal function of the volume of production in the next technological cycle. This ensures that each of the sectors selects its production plans in a unique way. We also consider the case where prices are set individually for each buyer depending on the order size. This is usual for wholesale trade, where the price of a product goes down as the order size grows.

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Copyright information

© Springer International Publishing Switzerland 2014

Authors and Affiliations

  • Alexander P. Abramov
    • 1
  1. 1.Dorodnicyn Computing Centre of RASRussian Academy of SciencesMoscowRussia

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