Efficient resource allocation was not achieved. It is no wonder then that centrally planned economies collapsed around the world by the 1990's. Institutions and their incentive mechanisms play a key role in determining economic performance. Failure of incentive mechanisms in a market economy The market price is not the only source of incentives in a market economy.
Some incentive mechanisms, however, fail to induce efficient behavior. For example, incentives influenced the course taken by Japanese banks in dealing with the problem of non-performing loans. Until the late 1990's, the Japanese regulatory and institutional environment did not motivate banks to take prompt actions that would have prevented their balance sheets from  deteriorating further.