Estimating Welfare Impacts from Food Subsidies and Controlled Agricultural Prices in Egypt

摘要

Economic efficiency is not the only important societal objective but it is a crucial goal for a nation that wishes to increase its per capita national income. In general, resources will be allocated efficiently among alternative outputs when marginal valuations of consumer equal marginal opportunity costs to producers. In free and competitive markets, price conveys information about valuations and costs and is the mechanism for coordinating production and consumption. If commodities are heavily subsidized and price denial is replaced by some other denial mechanism such as rationing, then market signals may not reflect true valuations of costs and incentives will be distorted and resource misallocations will exist.