Coordination: The Problem of Coordination in Bonnita Village

The Problem of Coordination in Bonnita Village
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Institutional Affiliation
The Problem of Coordination in Bonnita Village
Introduction
Underdevelopment traps arises when economic agents fail to coordinate their efforts to achieve optimal resource allocation. Notably, this phenomenon makes it impossible to achieve economic convergence besides keeping the affected region in a poverty trap. This trap cannot be avoided unless massive, coordinated industrial policy is executed. As such, state intervention is required to eliminate the problem of systematic resource misallocation or discoordination. The ensuing discussion explicates various coordination problems with a special reference to Bonnita case.
One of the problems facing Bonnita village and the Kingdom of Cow in general is lack of coordination across different economic sectors. Arguably, all farmers in Bonnita are reliant on the urban market as a point of sale for their produce. As it stands, there is no standard to define the best product. This represents a pure coordination problem where the producers and the consumers have no definitive characteristic of the best product (Foss & Loasby, 2013). In line with this, it is upon the farmers to convince the urban buyer that their product is good. This is despite the quality of the produce is not guaranteed given the distance between the production point and the market and the time required to transport them especially during the rainy season. Lack of coordination between the producer and other economic sectors implies that there is no set standard to define the best quality of products presented in the market and farmers can only rely on their ability to convince the urban buyer that their produce is of high quality. This kind of problem occurs when actors do not care what standard there is as long as there is some kind of a standard (Foss & Loasby, 2013).
Another problem present in the case of Bonnita is that differing preference. This problem is characterized by the presence of numerous Pareto optima equilibriums all of which are ranked differently both by the producers and the buyers (Foss & Loasby, 2013). This preference coordination problem is exemplified by the fact that all citizens in the village are farmers though they produce different types of produce. Even if one assumes that specialization in agriculture has helped solve the problem of poverty in the village and even if every farmer/producer is indifferent in regard to the different type of crops they produce, there are economic gains in engaging in different economic activities to ensure that all market demands are met on time.
The third kind of coordination problem arises due to institutional problems. This iterated shared coordination problem is evident in the lack of proper infrastructure between the village and the urban market (Foss & Loasby, 2013). Without some direction and institutional cooperation, economic coordination cannot be achieved. Clearly, there is no agreed cooperation between societal institutions which has in turn made it difficult to maintain the road infras...