Efficiency, Distributional Equity and Optimal Structure M N Murty Formulae for optimal price structures for public sector intermediary and final consumption goods are derived taking into account the objective of distributional equity. Estimates of optimal price structures for public electricity supply in India are made using data from different sources. The estimates show that electricity should be sold at subsidised prices for both final consumption and intermediary input uses in India. However, the rate of subsidy should be less for intermediary input uses in relation to final consumption uses of electricity Optimal price structures also indicate a marked trade-off between consumption efficiency and distributional equity objectives.
Maddipati Narsimha Murty, “Prices for Public Electricity Supply in India-Efficiency, Distributional Equity and Optimal Structure”, Economic and Political Weekly, vol. Vol. 22, pp. 1762-1770, 1987.