ABSTRACT
One way of studying the distribution of income among individuals and households is in terms of the incomes derived from the various factors of production. This is the model which economists have generally followed since it was first introduced by Ricardo. Most theories, however, have concentrated on the question of the prices of the various factors of production and their shares in the national income. They have also considered these factor prices and income shares mainly for the special case of highly competitive factor markets. In practice, there are many ways in which the functioning of factor markets in LDCs differs from this assumption. Further, these factor prices and shares only relate to the functional distribution of income. In order to explain the personal distribution of income we must also consider the proportions of the population deriving their incomes from the different factors of production. Therefore the preceding three chapters discussed a number of ways in which prevailing theories have to be modified to take account of these limitations.
