5th NORDIC-BALTIC CONFERENCE IN REGIONAL SCIENCE
GLOBAL-LOCAL INTERPLAY IN THE BALTIC SEA REGION
Pärnu, Estonia, October 1-4, 1998

Ülo Ennuste
Estonian Institute of Economics at Tallinn Technical University
Estonia pst. 7, EE0001 Tallinn, Estonia
Tel: +37 26 444 750     Fax: +37 26 308 851
E-mail: Ulo.Ennuste@Teleport.ee

This note aims at the mathematical modelling of the interregional cooperation planning issues with the help of  a Bayesian incentive compatible information mechanism. In this perspective we describe Aoyagi (1998) mechanism model and combine this with an optimal planning model for the correlated asymmetric-information economic union decision making. On the basis of the Lagrangian analyses of this model we make remarks on reasonable institutional frameworks to deal with these decisions. We also discuss some specific planning problems connected with cooperation dynamics for different regions. In the end we give some modest policy advises in the field of cooperation institutions design.