Small and large price reforms

John Mackinnon

No 1996-11, CSAE Working Paper Series from Centre for the Study of African Economies, University of Oxford

Abstract: A simple model of an open exchange economy with two commodities is used to investigate the relative merits of small and large reforms: reforms are represented as movements in the relative price of the two commodities, achieved by tightening or relaxing quotas. Three approaches, based on majority voting, the costs of compensation, and social welfare, are used to compare the merits of small and large reforms. It is found that large reforms win more votes than small reforms, whatever the direction of change: that the ration of marginal gross burden of compensation to marginal net benefit is highest for small reforms: and that when distributional considerations are allowed to play a part, the shape of the social welfare function is wholly indeterminate. In particular, local minima in social welfare cannot be ruled out.

Date: 1996
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ora.ox.ac.uk/objects/uuid:13a86c9f-8bce-4512-b117-b042fbf4b760 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:csa:wpaper:1996-11

Access Statistics for this paper

More papers in CSAE Working Paper Series from Centre for the Study of African Economies, University of Oxford Contact information at EDIRC.
Bibliographic data for series maintained by Julia Coffey ().