Performance Incentives Versus Prices Versus Quantities.
Abstract
The paper contains an analysis of the 'performance incentive function' which prescribes a reward received by producers as a function of their output and their costs. Specifically, there is a comparison of the degree to which performance incentives, prices, or prescribed quantities achieve allocative efficiency. When one good is being controlled, it is proved that a performance incentive function can be constructed which achieves the center's objective and yet which does not require any knowledge by the center of the producer's cost function. The second-best solution achieved with performance incentives when more than one good is being controlled is also discussed. (Author)
Document Details
- Document Type
- Technical Report
- Publication Date
- Dec 01, 1976
- Accession Number
- ADA034816
Entities
People
- Gregory G. Hildebrandt
- Laura D'andrea Tyson
Organizations
- United States Air Force Academy