Targets issued to enterprises in centrally planned economies are frequently taut. The literature on tautness has neglected the aggregate effects of taut plans. Since the outputs of some enterprises are inputs to others, taut plans allow for more intensive use of available resources, but coordination of taut plans is made difficult by incomplete information about the capacity constraints of various enterprises. We derive an aggregate relationship between the tautness of plans and total output.
All Science Journal Classification (ASJC) codes
- Economics and Econometrics