Shadow Prices for Project Selection in the Presence of Distortions: Effective Rates of Protection and Domestic Resource Costs

Authors

T.N. Srinivasan, Indian Statistical Institute
Jagdish N. Bhagwati, Columbia Law SchoolFollow

Document Type

Article

Publication Date

1978

DOI

https://doi.org/10.1086/260649

Abstract

The paper addresses the problem of deriving shadow prices for use in project evaluation when the existing allocation is characterized by ad valorem trade distortions. The analysis is used to clarify and resolve the long-standing debate among effective-rate-of-protection and domestic resource-cost proponents as to the respective merits of their measures as methods of project evaluation. The derivation of shadow factor prices is then extended to three major factor market imperfections familiar from extensive trade-theoretic analysis.

Disciplines

International Economics | International Trade Law | Law

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Comments

© 1978 by The University of Chicago.

Recommended Citation

T.N. Srinivasan & Jagdish N. Bhagwati, Shadow Prices for Project Selection in the Presence of Distortions: Effective Rates of Protection and Domestic Resource Costs, 86 J. Pol. Econ. 97 (1978).
Available at: https://scholarship.law.columbia.edu/faculty_scholarship/4046