A model is given for sewerage planning which extends over a region controlled by a number of local governments, whereas the total grant allocated to this region is preassigned by the central government. A regional linear programing model is first set up, and using a method of decomposition, it is shown that this method itself is a decision‐making process in which information is exchanged between two levels, the central and local governments. It is shown that the aforementioned decision making process can be applied in grant allocation problem
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