A distribution chain is a complex chain and it has numerous problems associated with it. In order to solve this problem it is necessary to discuss the main questions associated with it. The main issues that are noted are, what is to be distributed, to whom is it distributed, how does distribution take place, and how is the share of each factor determined in distribution.

The question of ‘What is to be distributed’ is studied from two points of view. One is from the point of view of the firm and the other is from the national point of view. When viewed from the point of view of the firm, whatever is produced in a firm is not completely distributed, because to carry on further productive activity, it would become difficult in the absence of resources to continue production, as the production will come to a stop. In order to keep the production process running, the firm will not distribute the complete wealth, but will only distribute the wealth after taking out some portion of the gross product for further production purposes. The Regulatory affairs professionals do the budgeting and planning in this respect.

The production processes mainly considered are replacement of fixed capital, replacement of circulating capital, payment of insurance premium and payment of taxes. In replacement of fixed capital, the producer takes out certain portion of the gross product in the form of depreciation for the repair and replacement of machines, capital, etc. The producer keeps accumulating this portion in such a manner that, when the machine is to be replaced completely, he has sufficient resources to install the new machine.

The producer regularly requires raw material in order to keep the firm in production and for this purpose he keeps a certain portion of the gross product for meeting the demand of circulating capital. Not only that a producer always keeps a part of the gross product for the payment of insurance premium in order to cover all the attendant risks. A producer has to pay a number of taxes in order to continue the production. These taxes may be in the form of production taxes, renewal of license etc. This payment of taxes is done from a part of gross product.