On Different Methods for Allocating Resources.

by Martin Shubik

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A list of eight different price mechanisms critical to an understanding of politico-economic and socio-economic allocation. Although it is difficult to give a clear characterization of the importance of different methods of distribution in a modern society, the following approaches are considered to be the major means of allocation of resources: (1) the economic market with a price system; (2) voting procedures; (3) bidding; (4) bargaining; (5) allocation by higher authority, fiat, or dictatorship; (6) allocation by force, fraud, and deceit; (7) allocation by custom, including gifts and inheritance; and (8) allocation by chance. Though simple, the list suggests different approaches used in many politico-economic systems, including less-developed countries and societies without democratic institutions. 11 pp. Ref. (KB)

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