TY  - JOUR
AU  - Sah,Raaj Kumar
AU  - Stiglitz,Joseph E.
TI  - Taxation and Pricing of Agricultural and Industrial Goods
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 1338
PY  - 1988
Y2  - June 1988
UR  - http://www.nber.org/papers/w1338
L1  - http://www.nber.org/papers/w1338.pdf
N1  - Author contact info:
Raaj Sah
University of Chicago
1155 East 60th
The Harris School
Chicago, IL  60637
E-Mail: r-sah@uchicago.edu

Joseph E. Stiglitz
Uris Hall, Columbia University
3022 Broadway, Room 814
New York, NY  10027
Tel: 212/854-0671
Fax: 212/662-8474
E-Mail: jes322@columbia.edu
AB  - This paper presents an analysis of price reform and of optimal pricing and taxation of agricultural and industrial goods in modern-day LDCs. Our analysis is based on a general equilibrium paradigm with a multitude of goods and income groups. It is consistent with several alternative institutional structures with in the agricultural and the industrial sectors, as well as with alternative hypotheses concerning unemployment and migration of labor across the two sectors.This approach differs substantially from the standard tax literature with regard to the structure of the economy and the set of admissible taxes.The rules of price reform which we derive are quite simple to implement, requiring only the knowledge of observable parameters such as price elasticities of demand and supply. The determination of optimal prices (and taxes) requires, in addition, the relative welfare weights on individuals' incomes and on investment. We show that it is desirable, ingeneral, to levy import and export taxes. Among new results are those presenting conditions under which all of the goods belonging to certain categories (such as all purchased agricultural inputs or all agricultural outputs which are not consumed) should be either taxed or stibsidized.
ER  -