Wage-Fixing (Routledge Revivals)

APPENDIX C

Two Models of Fiscal Devices for the Control of Cost-Push Inflation

I

In this appendix we will assume, as in Appendices A and B, that selling prices are set as a mark-up on the labour cost of production. But we modify the result by introducing (1) a tax/subsidy scheme designed to tax (or to subsidise) rates of increase of selling price in excess of (or falling below) some permitted rate of rise and (2) a tax/subsidy scheme designed to tax (or to subsidise) rates of increase of money wage rates in excess of (or falling below) some permitted rate of rise.

In the absence of either of these fiscal schemes we would start with a mark-up equation corresponding to that given in equation (1) of Appendix A, namely,

In Appendices A and B ...