The Allocation of Resources in the Presence of Indivisibilities

Herbert Scarf

No 1068, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: 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.

Pages: 22 pages
Date: 1994-01
Note: CFP 880.
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Citations: View citations in EconPapers (73)

Published in Journal of Economic Perspectives (Fall 1994), 8(4): 111-128

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Journal Article: The Allocation of Resources in the Presence of Indivisibilities (1994)
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