IDEAS home Printed from https://ideas.repec.org/a/eee/ireced/v36y2021ics147738802030027x.html
   My bibliography  Save this article

Normative shortages and the limits of rationing by price

Author

Listed:
  • Diduch, Amy McCormick

Abstract

Textbook models of demand and supply overlook the potential for market shortages at equilibrium prices and obscure the dependence of demand on income. The use of a step demand function and the delineation of “wants” and “needs” results in different conclusions about the size of market shortages, the role of price in eliminating shortages, and the meaning of normative shortages. The existence of market and normative shortages at equilibrium prices suggests that more attention should be given to optimal rationing of consumer goods when price rationing fails to achieve socially efficient outcomes. This analysis is illustrated using the market for N95 protective masks in the spring of 2020 and includes suggestions for classroom use.

Suggested Citation

  • Diduch, Amy McCormick, 2021. "Normative shortages and the limits of rationing by price," International Review of Economics Education, Elsevier, vol. 36(C).
    • Handle: RePEc:eee:ireced:v:36:y:2021:i:c:s147738802030027x
    DOI: 10.1016/j.iree.2020.100200
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S147738802030027X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.iree.2020.100200?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Lucie Gadenne, 2020. "Can Rationing Increase Welfare? Theory and an Application to India's Ration Shop System," American Economic Journal: Economic Policy, American Economic Association, vol. 12(4), pages 144-177, November.
    2. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard H, 1986. "Fairness and the Assumptions of Economics," The Journal of Business, University of Chicago Press, vol. 59(4), pages 285-300, October.
    3. Mueller, H.F. & Uphoff, W.H. & Zoellner, H., 1974. "Medical services--demand versus need: a comment," American Journal of Public Health, American Public Health Association, vol. 64(1), pages 54-57.
    4. Sah, Raaj Kumar, 1987. "Queues, Rations, and Market: Comparisons of Outcomes for the Poor and the Rich," American Economic Review, American Economic Association, vol. 77(1), pages 69-77, March.
    5. Schaefer, M.E., 1975. "Demand versus need for medical services in a general cost benefit setting," American Journal of Public Health, American Public Health Association, vol. 65(3), pages 293-295.
    6. Sen, Amartya, 1983. "Poor, Relatively Speaking," Oxford Economic Papers, Oxford University Press, vol. 35(2), pages 153-169, July.
    7. Jeffers, J.R. & Bognanno, M.F. & Bartlett, J.C., 1971. "On the demand versus need for medical services and the concept of "shortage"," American Journal of Public Health, American Public Health Association, vol. 61(1), pages 46-63.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zan Yang & Songtao Wang, 2011. "The impact of privatization of public housing on housing affordability in Beijing: An assessment using household survey data," Local Economy, London South Bank University, vol. 26(5), pages 384-400, August.
    2. Martin Ravallion, 2022. "On the Gains from Tradable Benefits‐in‐kind: Evidence for Workfare in India," Economica, London School of Economics and Political Science, vol. 89(355), pages 770-787, July.
    3. Michael Seiler, 2014. "The Effect of Perceived Lender Characteristics and Market Conditions on Strategic Mortgage Defaults," The Journal of Real Estate Finance and Economics, Springer, vol. 48(2), pages 256-270, February.
    4. Burks, Stephen V. & Carpenter, Jeffrey P. & Verhoogen, Eric, 2003. "Playing both roles in the trust game," Journal of Economic Behavior & Organization, Elsevier, vol. 51(2), pages 195-216, June.
    5. David Rea & Craig Froehle & Suzanne Masterson & Brian Stettler & Gregory Fermann & Arthur Pancioli, 2021. "Unequal but Fair: Incorporating Distributive Justice in Operational Allocation Models," Production and Operations Management, Production and Operations Management Society, vol. 30(7), pages 2304-2320, July.
    6. Seema Kacker & Tin Aung & Dominic Montagu & David Bishai, 2021. "Providers preferences towards greater patient health benefit is associated with higher quality of care," International Journal of Health Economics and Management, Springer, vol. 21(3), pages 271-294, September.
    7. Emin Karagözoğlu & Elif Tosun, 2022. "Endogenous Game Choice and Giving Behavior in Distribution Games," Games, MDPI, vol. 13(6), pages 1-32, November.
    8. Bradley J. Ruffle, 2005. "Buyer Countervailing Power: A Survey of Experimental Evidence," Working Papers 0512, Ben-Gurion University of the Negev, Department of Economics.
    9. Antonides, Gerrit & Kroft, Maaike, 2005. "Fairness judgments in household decision making," Journal of Economic Psychology, Elsevier, vol. 26(6), pages 902-913, December.
    10. Huang, Jen-Hung & Chang, Ching-Te & Chen, Cathy Yi-Hsuan, 2005. "Perceived fairness of pricing on the Internet," Journal of Economic Psychology, Elsevier, vol. 26(3), pages 343-361, June.
    11. Martin Ravallion & Shaohua Chen, 2013. "A Proposal for Truly Global Poverty Measures," Global Policy, London School of Economics and Political Science, vol. 4(3), pages 258-265, September.
    12. Hendrik Dalen & Kène Henkens, 2013. "Dilemmas of Downsizing During the Great Recession: Crisis Strategies of European Employers," De Economist, Springer, vol. 161(3), pages 307-329, September.
    13. Clément Bellet, 2017. "Essays on Inequality, Social Preferences and Consumer Behavior," Sciences Po publications info:hdl:2441/vbu6kd1s68o, Sciences Po.
    14. Bodo Schlegelmilch & Magdalena Oberseder, 2007. "Ethical Issues in Global Supply Chains," Symphonya. Emerging Issues in Management, University of Milano-Bicocca, issue 2 Ethics .
    15. Erhao Xie, 2019. "Monetary Payoff and Utility Function in Adaptive Learning Models," Staff Working Papers 19-50, Bank of Canada.
    16. Charness, Gary & Du, Ninghua & Yang, Chun-Lei, 2011. "Trust and trustworthiness reputations in an investment game," Games and Economic Behavior, Elsevier, vol. 72(2), pages 361-375, June.
    17. Stefano DellaVigna, 2009. "Psychology and Economics: Evidence from the Field," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 315-372, June.
    18. Christophe Muller & Asha Kannan & Roland Alcindor, 2016. "Multidimensional Poverty in Seychelles," Working Papers halshs-01264444, HAL.
    19. Chris Sarlo, 2007. "Measuring Poverty – What Happened To Copenhagen?," Economic Affairs, Wiley Blackwell, vol. 27(3), pages 6-14, September.
    20. Tim Benning & Els Breugelmans & Benedict Dellaert, 2012. "Consumers’ evaluation of allocation policies for scarce health care services: Vested interest activation trumps spatial and temporal distance," Marketing Letters, Springer, vol. 23(3), pages 531-543, September.

    More about this item

    Keywords

    Normative shortages; Non-price rationing; Step demand functions;
    All these keywords.

    JEL classification:

    • A2 - General Economics and Teaching - - Economic Education and Teaching of Economics
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ireced:v:36:y:2021:i:c:s147738802030027x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/international-review-of-economics-education .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.