Resource Allocation During the Transition to a Market Economy : Policy Implications of Supply Bottlenecks and Adjustment Costs /
The paper discusses the case against a laissez faire approach to resource allocation and develops a model of supply bottlenecks. It argues that: (1) once budget constraints are hardened and credit markets begin to function appropriately, externalities associated with production bottlenecks and adjus...
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| Format: | Journal |
| Language: | English |
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Washington, D.C. :
International Monetary Fund,
1993.
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| Series: | IMF Working Papers; Working Paper ;
No. 1993/006 |
| Online Access: | Full text available on IMF |
| Summary: | The paper discusses the case against a laissez faire approach to resource allocation and develops a model of supply bottlenecks. It argues that: (1) once budget constraints are hardened and credit markets begin to function appropriately, externalities associated with production bottlenecks and adjustment costs--other considerations aside--provide a case for subsidizing the costs of critical inputs for the state sector but not the new private sector; (2) the optimal subsidy declines as the private sector grows; and (3) the subsidy should be 'financed' by taxing wage income in the state sector, which will strengthen incentives for workers to move. |
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| Item Description: | <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required |
| Physical Description: | 1 online resource (41 pages) |
| Format: | Mode of access: Internet |
| ISSN: | 1018-5941 |
| Access: | Electronic access restricted to authorized BRAC University faculty, staff and students |