Economic Power Structure and Optimal AllocatiOn 0f Productive Factors

Economic Power Structure and Optimal AllocatiOn 0f Productive Factors


Author:Zhang Yishan, Yu Weisheng Journal:Economic Research Journal  Date:2009(6)

Keywords Power; Responsibility; Contract; Economic Efficiency; Optimal Allocation

Abstract

The basic objective of people’s economic activities is to maximize interests while such interests are obtained through distribution. Emergence of interest distribution mechanism is in tum the result of power games, and the setup of power determines that of distribution, both the distribution system and the power system are identical. To attain full utilization and optimal allocation of resources so that social interests and welfare are optimized, the basic way is to realize, at the same hierarchy level, power reciprocity among different economic agents and meanwhile to make sure that power and responsibility are symmetric for the same economic agent. Borrowing the game theories, this paper proves the above arguments, with mathematical derivation.

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