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Non-Price Rationing
Queuing is a commonly-used way to solve the rationing
problem caused by price ceilings. A queue is a
waiting line that solves the rationing problem by a
"first-come, first-served" solution. Though price ceilings
fix the monetary cost that buyers can pay so that buyer
equilibrium cannot be restored by higher prices, they do not
limit the nonmonetary cost of waiting.
Under a system of queuing, waiting time changes to
restore buyer equilibrium. A person who is willing to buy
five items for $1.00 each with no waiting time may be
unwilling to buy any if the price is $1.00 with a two-hour
wait. Waiting time rises until enough buyers drop out of the
market to restore the match between the amount available and
the amount people are willing to buy.1
Although queuing is a rarity in the United States, it was
part of daily life in Eastern Europe and the Soviet Union
before 1990. Hedrick Smith explained:
"The only real taste of stoical shopping vigils
in recent American history were the pre-dawn lines at
service stations during the gasoline crisis in the winter
of 1973-4... But it was temporary and only for one item.
Imagine it across the board, all the time, and you
realize that Soviet shopping is like a year-round
Christmas rush. The accepted norm is that the Soviet
woman daily spends two hours in line, seven days a week.
. . I noted in the Soviet press that Russians spend 30
billion man-hours in line annually to make purchases....
30 billion man-hours alone is enough to keep 15 million
workers busy year-round on a 40-hour week."2
Smith noted that coping with shortages and queuing
required a different approach to shopping than that with
which Americans were familiar. People tended to carry large
amounts of cash and a bag or briefcase whenever they went
out, just in case they found some desirable good. When they
saw a line, they joined it because there usually was
something worthwhile at the front. People shopped not just
for themselves but for friends and kin, and as a result
"know by heart the shoe, bra, pant and dress size, waist and
length measurements, color preferences and other vital
particulars for a whole stable of their nearest and
dearest..." 3
In another
reading selection we noted that it was possible to
explain the gasoline shortage and the resulting queuing in
the early 1970s in terms of a good-versus-bad model, but
that economists did not use this model. Rather, economists
consider the shortages the direct result of price controls
in existence at the time. A move by certain oil-producing
nations caused the supply curve for gasoline to shift to the
left. When U.S. government price restrictions kept pump
prices from rising to equilibrium, shortages resulted. These
shortages were predictable because price is a rationing
device in this model. In contrast, the only function of
price in a good-versus-bad model is to take money from one
group and give it to another.
A second system of nonprice rationing is with
coupons. In this system, the government distributes
coupons that must be presented along with money in order to
buy a product. Coupons restore buyer equilibrium because
they change the cost of a product, though in a different way
than queuing does. Under the system of queuing, the cost of
a product is its price plus waiting time; under a system of
coupon-rationing, the cost of a product is its price in
money plus its price in coupons. The picture below shows
coupons from two of the ration books issued during the
Second World War, when the United States had an extensive
system of coupon rationing. (Click
here to see more pictures of these books.)
The existence of price ceilings is often accompanied by
illegal transactions, or a black market. Black
markets exist when people try to "beat the system," either
the system of coupons or queuing. In an economy of free
markets, there can be no black markets.
1There are actually two sorts or
queuing, by line and by list. An example of queuing by list
is the waiting list public libraries often have for popular
new releases. Queuing by list works when the value of an
item decreases the longer one must wait for it. Many people
want to read new books while they are still on the
best-seller list, and if they have to wait too long, they
will no longer want to read the book.
2The
Russians
(Quadrangle/The New York Times Book Co., 1976), p.
64.
3Ibid., p.
62.
Copyright
Robert Schenk
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