Date of Submission


Date of Award


Institute Name (Publisher)

Indian Statistical Institute

Document Type

Doctoral Thesis

Degree Name

Doctor of Philosophy

Subject Name

Quantitative Economics


Economics and Planning Unit (EPU-Delhi)


Chetty, V. K. (EPU-Delhi; ISI)

Abstract (Summary of the Work)

Even after thirty five yaara of planned economic develogment a large fraction of people in India cannot afford to have the basic necessities Like food, clothing and shelter. To quote from the Econonic Survey [1984-85), Buoyant agricultural parformance thus far has dependad mainly upon production gains in wheat and rice. Performance with raspect to other critical crops, such as pulser and oilseeds, and dryland farning generally, remains veak. The rate of growth of industry, although somewhat higher than in the ten years preceding the sixth Plan, remains low... population continues to grow at about 2 percent per year. At this rate, even if we achieve an average GNP growth rate of about 5 percent per year in the Seventh Plan pariod, we will not be able to nake sufficient progres in tackling the pressing problems of poverty and unenployment.Experience during the last three and a half decades shows that econonic growth alone nay not lead to an equitable distribution of essentáal goods. To conbine efficiency with equity, the Indian Governnent has been experinanting with dual pricing schenes for sone commoditics. Accurding to this schene, 1limited anounts of cormoditios 11ke wheat, sugar and rice are so14 through governnent operated fair prioe shope at s ubsidisod prices.Multiple prices for goods and services are used in nany countries. This is fairly common for pablic utilities l1ike power, transport etc. There are a number of theoretical and empirical studies of such schenes like two-part tariff. They generally nake use of the partial equilibrium franework.A very general model to study several 'Second best problems has been formulated by Gueenerie (1979)]. He has also characterixed the Second Best Pareto Optimal solutians. The purpose of this atudy is to incorporate dual pricing uchenas in a general equilibrium framework and exanine their implications for the production and distribution of rice, wheat and edible olls in India.The plan of the study is as follows: In Chapter II, we shaw that for a consumer the utility maximization problem with dual pricing ia equivalent to naximizing utility when there is asingle price for each good and this price for the good in question is obtained as a vaightad average of the free narket price and the ration price under dual pricing along with an appropriate income subaidy to conpensate for the with- drawal of the publio distribution aystem.We then examine the validity of nany standard propositions in microeconomie theory in the context of dual prieing. These results include Roy a identity, Slutzky equation, adding up property of demand functions etc. He conclude this chapter by obtaining the dual problen for a firm maximising its profita, given that one of the inputa is dual priced.The analysis is Bimilar to that of the consuner.In Chapter III, we define the concept of a aual-price-equilibriun in an exchange econony vithout production as a system of pricas and allocations together with a ration-quota and a ration price for a aingle good such that all markets clear, every consumer maximizes utility, and at least one consuRAE buys nore of this good than the prescribed quota with a higher narket price than the ration price.


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