The New Soviet Incentive Model: Comment
Volume: Volume 10, No. 2
Issue: Autumn 1979
Pages: pp. 720-725
Authors: Steinar Ekern
Title: The New Soviet Incentive Model: Comment
Abstract: Elaborating on the analysis of Weitzman and of Snowberger, this article develops four additional comparative statics results for the Soviet incentive model. The article demonstrates how the optimal change in the firm's self-selected target in response to changes in the central planners' parameters crucially depends on properties of the absolute risk aversion function. Extending the model to include preferences over a proportional discretionary bonus, the article shows how the relative risk aversion becomes a key factor.
JEL Classification
Microeconomics Theory of Production (0223)
Socialist and Communist Economic Systems (0520)
Wage and Fringe Benefit Studies (8242)