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Economic Analysis of Planned Economic Systems

In: China’s Reform: History, Logic, and Future

Author

Listed:
  • Guoqiang Tian

    (Texas A&M University)

  • Xudong Chen

    (Shanghai University of Finance and Economics)

Abstract

In a planned economic system, society is organized as a unitary economic entity, in which the central planning agency allocates resources via administrative command rather than the price mechanism of the competitive market. Thus, two prerequisites must be satisfied for the efficient operation of the planned economy mechanism. The first is informational efficiency. The second prerequisite is incentive compatibility. However, these two prerequisites cannot be satisfied in most situations due to information asymmetry and the individual pursuit of self-interest.

Suggested Citation

  • Guoqiang Tian & Xudong Chen, 2022. "Economic Analysis of Planned Economic Systems," Springer Books, in: China’s Reform: History, Logic, and Future, chapter 0, pages 91-95, Springer.
    • Handle: RePEc:spr:sprchp:978-981-19-5470-2_8
    DOI: 10.1007/978-981-19-5470-2_8
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