Optimal Price and Income Regulation under Uncertainty in the Model with One Producer.
Abstract
An economic model is considered with n consumers and only one producer. The producer can be viewed as a state sector of the economy which supplies consumers with q different products. The products can be merchandise as well as different types of labor. Supply can be positive and negative as well. E.g., negative supply of a labor to a consumer means that the consumer is working for the producer delivering that type of labor which he gets with negative sign. In the model the producer does not maximize his profit; therefore, taking into account the possibility of a negative supply, we think of a model of a pure exchange economy in which the state sector plays a role of technological restriction on the economy as a whole. The state governs the prices (common to everybody) and levies individual taxes. If the tax is negative, then the consumer gets a subsidy from the state equal to the absolute value of this tax. Each consumer acts independently of the others maximizing his own utility function under budgetary constraints. The aim of the state is to find a feasible production plan which maximizes the sum of all utilities of individual consumers.
Document Details
- Document Type
- Technical Report
- Publication Date
- Aug 01, 1982
- Accession Number
- ADA121758
Entities
People
- Michael I. Taksar
Organizations
- Stanford University