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References (7)
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H. Scarf (1981)
Production Sets with Indivisibilities-Part II: The Case of Two ActivitiesEconometrica, 49
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W. Cook, Thomas Rutherford, H. Scarf, D. Shallcross (1993)
An Implementation of the Generalized Basis Reduction Algorithm for Integer ProgrammingINFORMS J. Comput., 5
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J. Drèze (1994)
Forty Years of Public Economics: A Personal PerspectiveJournal of Economic Perspectives, 9
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L. Lovász, H. Scarf (1990)
The Generalized Basis Reduction AlgorithmMath. Oper. Res., 17
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H. Scarf (1981)
Production Sets with Indivisibilities Part I: GeneralitiesEconometrica, 49
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H. Scarf (1990)
Mathematical Programming and Economic TheoryOper. Res., 38
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H. Lenstra (1983)
Integer Programming with a Fixed Number of VariablesMath. Oper. Res., 8
- Publisher
- American Economic Association
- Copyright
- Copyright © 1994 by the American Economic Association
- Subject
- Articles
- ISSN
- 0895-3309
- DOI
- 10.1257/jep.8.4.111
- Publisher site
- See Article on Publisher Site
Abstract
Abstract A major theme of economic theory is that optimality, at the level of the firm or the economy as a whole, can be reached by profit maximization using competitive prices. The conclusion requires the assumption that the production possibility set be convex and is not valid if production displays economies of scale based on significant indivisibilities. The paper provides a specific quantity test for detecting optimality in the presence of indivisibilities and suggests that it may be useful to view the large firm as an algorithm for solving programming problems in which some of the variables assume integral values.
Journal
Journal of Economic Perspectives – American Economic Association
Published: Nov 1, 1994