This paper is concerned with the decision-making process of two level -central and local government- system from the point of view of recognizing the autonomy of local government.
Suppose a plan extended over a region consists of some local governments. The object of this plan is to improve the residencial environment in this region. Further, it is assumed that each government has political and fiscal restrictions and that the total of the grant allocated to this region is previously decided by a central government.
The problem is how each local government designs an autonomous plan, considering the consciousness of the residents, and how the central government, as coordinator, harmonize these plans, allocating the grant so as to make a plan efficiently as possible.
We first set up a general regional model in a Linear Programming framework. Secondly, using a method of a decomposion principle, we show that this method itself is a decision-making process, in which informations are exchanged between two levels. Finally, we present a sewerage planning model as an example, and show that aforementioned decision-making process works efficiently in this example.