Cereal producers, prices and the supply of manufactured consumer Goods: a note

The study presents a simple model of a peasant household, which extends the basic agricultural household model, by attempting to explicitly incorporate the operational milieu of such a household in Ethiopia during the 1980s specifically, quantity constranined markets for labor and manufactured consumer goods are introduced. The resultant comparative static results indicate that the response of cereal-producing peasant households to market-related incentives is more complex than in an un-rationed context. Income and substitution effects, as well as input substitution possibilities are identified as key determinants of that response. Although the paper is based on the situation in the 1980s, its results are valid so long as shortages in manufactured consumer goods persist in the rural areas