track ration x, while a type-2 household is allocated no ration at all. We also allow
for different endowments of Y being held by the two types.
The representative type-1 household faces the problem
max U (x1, y1)
x1,y1
subject to px1 + y1 ≤ y1 + (p — p)x ≡ m1, (9)
where y1 is its endowment of Y. Unlike in (1), the budget line is not kinked.
Because resale is possible, household 1 can be thought of as always selling its
entire plan-track allocation to gain the implicit subsidy (p — p)X, and then buying
the amount it wishes to consume. The implicit subsidy is a component of its full
income m1 .
The problem for the representative type-2 household is
(10)
max U (x2, y2)
x2,y2
subject to px2 + y2 ≤ y2 ≡ m2.
Because a type-2 household does not receive a plan-track allocation of X , its full
income m2 is simply its endowment y2.
18
More intriguing information
1. Behavior-Based Early Language Development on a Humanoid Robot2. ¿Por qué se privatizan servicios en los municipios (pequeños)? Evidencia empírica sobre residuos sólidos y agua.
3. The name is absent
4. AN ECONOMIC EVALUATION OF THE COLORADO RIVER BASIN SALINITY CONTROL PROGRAM
5. Personal Experience: A Most Vicious and Limited Circle!? On the Role of Entrepreneurial Experience for Firm Survival
6. The name is absent
7. The name is absent
8. Intertemporal Risk Management Decisions of Farmers under Preference, Market, and Policy Dynamics
9. The name is absent
10. Real Exchange Rate Misalignment: Prelude to Crisis?