COWLES FOUNDATION FOR RESEARCH IN ECONOMICS
AT YALE UNIVERSITY

Box 208281
New Haven, CT 06520-8281

COWLES FOUNDATION DISCUSSION PAPER NO. 930

"Mathematical Programming and Economic Theory"

Herbert E. Scarf

November 1989

The paper discusses the analogy between economic institutions and algorithms for the solution of mathematical programming problems. The simplex method for solving linear programs can be interpreted as a search for market prices that equilibrate the demand for factors of production with their supply. An interpretation in terms of the internal organization of the large firm is offered for Lenstra’s integer programming algorithm.

Keywords: Integer programming, prices, factors of production, algorithms

JEL Classification: 213, 021