Economics of Decentralization

Dec 29, 2012   //   by admin   //   Insights  //  No Comments


Decentralization is a concept that has been tried with success and failure at various schemes and locations. It is the process of splitting the system into smaller repeatable units and hence removing a centralized control structure. Such isolated systems are self contained and self sufficient and prevents contagious failure.

In a typical Centralized structure, the centre controls all the nodes connected to it. Though the systems utilized the resources to it maximum efficiency and retains lesser operation costs due to shared usage of resources, all the nodes fail if the centre fails and thus resulting in overall failure.

In modern economics, the centralized scheme of architecture controls governments, monetary policy, energy etc. However, decentralization by itself is not the key to get rid of negative effects of centralized structure due to the definite benefits associated with it.

We have conceptualized a shared decentralization structure which uses the best of both. Centralization is the reason and the cost of being directly affected by global tantrums due to its exposure while an isolated system fares much better at downturns. However, an isolated system doesnt prosper with growth of the world and thus  again not the preferred one.


Decentralization with centralized features would eliminate the negative effects of both and use the best of both. Here it how its works in a typical energy environment.


Central Power Station generates power

Users connected to Central Power stations

Energy Shared by the users

If any fault in the system develops, the leading edge gets affected.

If the fault is developed centrally, all the users affected.


In our concept


Every user generates power for domestic consumption

Every user connected to each other and to the central systems

Every user still connected to centralized system

If any fault develops at central or in between, the individual system takes over and thus shielding it from total failure.

Surplus energy of each user fed back to the system.


Variations of this model can be utilized for monetary systems, food production and supply chain and much more. Such a decentralized environment with centralized features are todays answer for the global tantrums like oil crises, inflation, recession etc. To know more about how decentralized environment can support a sustainable economy, please click here.



Leave a comment

Social Icons

Idea Forum

Have a revolutionary Idea?

Tell Us or Discuss in forum to make it real

Facebook Likebox

Twitter Feeds