On the relationship between scale, allocation, and distribution

Abstract

We develop a formal framework to investigate the relationship between ecological economics' concept of scale, and the more traditional concerns of allocation, and distribution. The framework presented here helps clarify differences between the normative and positive aspects of scale, allocation, and distribution. In particular, we distinguish between ‘normative rules’ and ‘normative benchmarks’. This distinction helps untangle the web of hierarchical and evolutionary relationships that connect scale, allocation, and distribution. We also introduce concepts of scale efficiency and distribution efficiency as counterparts to the widely used allocation efficiency, and develop a simple dynamic model relating these three efficiencies. We then present stylized facts about the relationship between scale, allocation, and distribution that this model helps uncover.