Long-term and short-term targets: Conflict and reconciliation

Kryazhimskiy, A.V. (2013). Long-term and short-term targets: Conflict and reconciliation. Innovation and supply chain management 7 (1) 1-5.

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We address the issue of a tradeoff between long- and short-term interests in economic management. Starting with an obvious observation that the actions targeted to long- and short-term goals are generally in conflict, we pass on to a less obvious satement that it is not an exceptional situation that a smart decision maker can reduce or even eliminate the conflict. We illustrate the statement by an informal analysis of a stylized model of management of an enterprise. We show that if the managers put enough effort in identification of the current-value shadow prices of the enterprise, their current short-term-optimal actions become non-distinguishable from the long-term-optimal ones.

Item Type: Article
Uncontrolled Keywords: Economic growth; Shadow price; Control theory
Research Programs: Advanced Systems Analysis (ASA)
Bibliographic Reference: Innovation and supply chain management; 7(1):1-5 (March 2013)
Depositing User: IIASA Import
Date Deposited: 15 Jan 2016 08:48
Last Modified: 27 Aug 2021 17:39
URI: https://pure.iiasa.ac.at/10300

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