Concluding Comments

The social prices for goods and factors are associated with the maximization of aggregate income of an economy operating with competitive markets for outputs and inputs. For tradable commodities, commodity-specific policy and market failures are the principal source of difference between private and social commodity prices. Unless the analyst requires results concerning short-run conditions, the economy-wide distortions of exchange rates will have a uniform impact on tradable-commodity systems. Some complications result from complex exchange management policies, but they are manageable in most circumstances. For social pricing of nontradable commodities, however, the estimation problems are far more difficult. For these commodities, explicit consideration of domestic demand and exchange-rate policy become essential elements of the social pricing exercise.