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Dr Sushama Murty

Dr Sushama Murty

Senior Lecturer in Economics


+44 (0) 1392 726265

Streatham Court, University of Exeter, Rennes Drive, Exeter, EX4 4PU, UK

Sushama Murty joined the University of Exeter in September 2010. She was a Post Doctoral Fellow at CORE-UCL, Belgium (2003-2004) and she has worked in the University of Warwick, UK (2004-2010).

Nationality: Indian

Administrative responsibilities

Economics and Finance Programme Director



BA (Delhi University), MA (Delhi University), PhD (University of California-Riverside)


Research interests

  • Public economic theory
  • Microeconomic theory
  • General equilibrium theory

Dr. Murty has worked on taxation issues and on the problem of externalities. Her work adopts a general equilibrium framework to study these problems.

Her research on externalities is on problems that concern both victims and generators of externalities. It is well known that externalities such as pollution imply fundamental non-convexities in the technologies and preferences of victim firms and consumers, which result in failure of markets where the rights-to-pollute are traded. The class of partially decentralized mechanisms proposed in the literature, such as a Pigovian-tax mechanism, can implement Pareto-efficient allocations. But, equilibria associated with them could be Pareto inefficient. In contrast, Dr. Murty’s work proposes a partially decentralized mechanism based on price and quantity signals, whose equilibrium concept satisfies both the first and the second-welfare theorem counterparts in non-convex economies with externalities.

There are also problems associated with modelling technologies of firms that generate externalities. By-products such as pollution that are emitted by firms are not freely disposable. Techniques employed in the literature to capture this violation of free-disposability could imply intuitively unacceptable trade-offs between goods: e.g., they can result in a negative trade-off between pollution and a pollution-causing input such as coal. Dr. Murty’s work proposes a new axiom called costly-disposability of pollution that corrects this problem. A technology that satisfies this axiom can be decomposed into a standard neoclassical intended-production technology and a nature’s emission-generating set. This decomposition can be very helpful in both empirical and theoretical works pertaining to the design of welfare-improving externality policies, measurement of green GDP, and explanation of phenomena such as the environmental Kuznets curve.

Comparison between different methods of taxation has traditionally been conducted in a partial equilibrium framework. For example, in imperfect markets, classical partial-equilibrium results demonstrate that the ad valorem form of indirect taxation tends to welfare-dominate specific taxation. In contrast, Dr. Murty’s work demonstrates that general equilibrium effects are very important for comparative studies of different tax systems, as these effects take into account the specificities of the institutional set-ups in which taxation takes place. In particular, they demonstrate that, under the institutional structures that are usually studied in the literature, ad valorem and specific taxation could be welfare-wise equivalent even with market imperfections.

  • Microeconomics
  • Public economics
  • Game theory

Taught modules

Previous taught modules:

  • BEE3033: Financial markets and decisions 1
  • BEE3034: Financial markets and decisions 2
  • BEE3048: Public economics 2
  • BEEM107: Public economics
  • BEEM121: Game Theory and Industrial Organization