The "Stationarity" of Shadow Prices of Factors in Project Evaluation, with and without Distortions

Authors

Jagdish N. Bhagwati, Columbia Law SchoolFollow
Henry Wan Jr., Cornell University

Document Type

Article

Publication Date

1979

Abstract

Until recently, the literature on cost-benefit analysis for projects has been largely within the domain of research on "public monopoly," literature currently reviewed by Jacques Lesourne, (ch. 3), and the work of public finance theorists as typified in the celebrated practical work of Ian Little and James Mirrlees in their Manual, and in the recent theoretical contribution of Peter Diamond and Mirrlees. International trade theorists have, however, turned now to the analysis of these problems, starting with the early work of Vijay Joshi and Deepak Lai, then that of W. M. Corden, and most recently culminating in the contributions of Ronald Findlay and Stanislaw Wellisz, and T. N. Srinivasan and Bhagwati.

The work of Findlay-Wellisz and Srinivasan-Bhagwati (F-W-S-B) explicitly deploys the tools, insights and ideas of general equilibrium international trade theory. In particular, their analyses have been addressed to the question of deriving the shadow prices for primary factors for the purpose of project evaluation in the presence of distortions: Findlay-Wellisz (F-W) considering produetmarket and trade distortions and Srinivasan-Bhagwati (S-B) also extending their analysis to a number of factor-market distortions.

Disciplines

Economics | Law | Law and Economics

Comments

Copyright © 1979 by the American Economic Association

Recommended Citation

Jagdish N. Bhagwati & Henry Wan Jr., The "Stationarity" of Shadow Prices of Factors in Project Evaluation, with and without Distortions, 69 Am. Econ. Rev. 261 (1979).
Available at: https://scholarship.law.columbia.edu/faculty_scholarship/4045