You are not currently logged in.
Access JSTOR through your library or other institution:
If You Use a Screen ReaderThis content is available through Read Online (Free) program, which relies on page scans. Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Project Evaluation, Shadow Prices, and Trade Policy
Ronald Findlay and Stanislaw Wellisz
Journal of Political Economy
Vol. 84, No. 3 (Jun., 1976), pp. 543-552
Published by: The University of Chicago Press
Stable URL: http://www.jstor.org/stable/1829868
Page Count: 10
You can always find the topics here!Topics: World prices, Shadow prices, Free trade, Factor prices, Trade policy, Tax subsidies, Taxes, Market prices, Economic capital, Coefficients
Were these topics helpful?See something inaccurate? Let us know!
Select the topics that are inaccurate.
Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Preview not available
The problem of how to determine the appropriate shadow prices of primary inputs for the evaluation of new projects in an open economy subject to distortions is discussed. These shadow prices are compared with the corresponding free-trade and actual market prices. It is shown that if the distortion is an output subsidy or tax on existing production, the optimal intervention for new projects is subsidies and taxes on primary factors equal to the difference between the shadow prices and the market prices and not an output subsidy or single shadow exchange rate to provide offsetting protection for the new project. It is also shown that projects viable under free trade may reduce welfare if they are introduced into a distorted economy, while projects that would increase welfare in these circumstances might not be viable under free trade.
Journal of Political Economy © 1976 The University of Chicago Press