'Product' and 'Factor' Revaluations in Seton-Leontief Type Models: Illustrations from Indian Institutional Sectors

Deepika Chawla

Artha Vijnana, 2014, vol. 56, issue 4, 425-442

Abstract: Seton proposes modified/unified version of Leontief in which set of utility based 'product prices' are determined simultaneously (like 'dual') with 'factor prices'. Such unique equilibrium pair of utility based product valuations in conjunction with factor input valuations are used to judge the extent of 'over-pricing' or 'under-pricing'. The simultaneous eigenvector solutions are indicative of revealing extent of under/over valuations of product and factor contents. Using this we prose to estimate nature of under/over valuations of organized factor inputs (both capital and labour in organized segments) vis-Ã -vis unorganized segment's factor inputs. Being the dual solutions it also paripassu reflects re-valuation of final product prices. Similar factor content/input segregation into 'rural' and 'urban' factor uses is also examined. By implication if the factor rewards or factor-valuations of the economy were to be charged, it would warrant implicit VAT like taxes/transfers together with changes in relative product prices across sectors.

Date: 2014
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