Resource allocation

Resource allocation is the allocation and distribution of scarce resources such as labor, capital, land and raw materials for the production of goods. To be distinguished from the question of the allocation is the question of the distribution ( distribution ) of the produced goods to individuals or groups in society (see distribution conflict).

Allocation problem

The term " allocation problem " can be loosely translated as " distribution problem " are called ( problem in the sense of ' task / question whose solution is fraught with difficulties '). You have to plan and decide how scarce factors of production can be distributed in order to achieve an optimal welfare outcome. (see also Decision Theory )

Every economy has a certain stock of factors of production. These factors are offset by the limited variety and unlimited needs of society and its members. This raises the question of what needs to be satisfied with the available resources. This is the allocation problem.

To achieve optimum (synonym: best ) to achieve distribution of resources, an economy needs to work as efficiently as possible. In connection with the allocation process is referred to as efficiency, when there is no improvement in production is more conceivable in which all members of an economy better since stood as before.

Methods of resource allocation

Market mechanism

" A market is a procedure to be taken in which, by the interaction of buyers and sellers of a good decisions about the price and quantity. "

The market mechanism has many advantages over other coordination mechanisms. For example, a functioning market mechanism leads to allocative efficiency. This means that buyers get the goods they want and can pay for. Here, the allocative efficiency is given by the marginal cost of production correspond to the marginal benefit of customers. By another volume of goods the welfare now would fall, because then the marginal cost no longer correspond to the marginal utility and thus lead to a new equilibrium. Furthermore, the market mechanism leads inter alia to production efficiency, has a motivation function and promotes technical progress. However, these benefits can only be effective if there is effective competition and the market also can satisfy all the needs of optimum. Not available this, it can lead to market failure.

State regulation

Here the state intervenes in the regulation of the market to ensure a degree of fairness in the distribution. This manifests itself in decentralized and centralized planning of the processes. The decentralized systems in general, as market economies and the central order systems are considered central economies.

In capitalist market economies, the scarcity is indicated by market prices. These market prices eventually also regulate the market. Allow markets to function as well as possible, the state Pareto- optimal amounts auffinden.Ein Pareto optimum must here is a state in which it is not possible to provide an individual better without putting at the same time another individual worse. The problem here is that while this may be very efficient, but not necessarily as just and fair. Approaches to the central solution of the allocation problem is defined as Karl Marx. Here, it is assumed that the solution of the allocation problem closely related to the solution of problem ownership is associated. Here, Marx sought a ' scheduled conscious organization of social production ' to. However, this is only possible through a centrally planned and directed market economy. According to his theory, completed the planned organization of production the struggle of a single individual for its existence and thus it is possible that a free, detached from rivalry Community is formed in the social security and social peace can be realized. It happens the distribution of resources by goods economic plan mass balances. Here the prices are fixed by the state and the means of production are nationalized the economy as opposed to a market economy. The price mechanism as scarcity indicator is rejected because it only takes into account the purchasing power moderate demand and not much higher real needs of the population. In socialist market economies, however, both planned and market economy market elements are combined. Here the prices result from both market prices and by government determination.

Example

Based on the box - diagram, the allocation of resources between two sectors of the economy is determined. To produce the goods from both sectors have the same factors of production are needed.

To determine the allocation of resources must first set the prices of goods ( here: Prices for automobiles and cosmetics) and the stock of resources ( here: labor and land ) be given.

The abscissa represents the total supply of labor, the vertical axis represents the total supply of ground. The blue line reflects the ground - labor ratio in the automotive industry, the red line the cosmetics industry.

In the point where intersect both ground - labor ratios (red and blue lines), the efficient allocation of resources to determine the ( resource ) is optimal production quantities of the two goods.

Increases the demand for cosmetics, the price for this commodity will rise. Producers will produce in this market and offer more. This has the consequence that more factors of production for the preparation of cosmetic products are in demand. Here it is clear that the price directs the distribution of productive forces in the production of goods.

If the labor and land use decreases in the automotive industry, the supply increases over those resources in the cosmetics industry. The factors of production that are no longer used in the automotive industry are directed in the cosmetics production. This means that you look at the cosmetics industry moves on the transformation curve in the direction of the sector, because the resource can be used best here. This effect, known as the Rybczynski effect is seen as a possible explanation for the foreign trade of an economy.

The production of cosmetics increases disproportionately to the increase in the soil supply. An increased supply of soil decreases at constant prices, the production amount of labor-intensive goods. From this it follows that the allocation of resources determines the production volume of the overall economy.