Shortages under Free Prices: The Case of Ukraine in 1992
AbstractThis paper examines whether shortages may occur in an economy in transition, even for goods whose prices are free. The empirical relevance of this phenomenon is suggested by a case study of Ukraine during 1992. The paper presents a model of enterprise behavior in an environment where key inputs are centrally allocated at preferential prices. It shows that the allocation of key inputs according to perceived need may create incentives for enterprises to perpetuate shortages, despite formal price liberalization. The analysis suggests that central allocation must be abolished for price liberalization to have its full efficiency effects.
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Bibliographic InfoArticle provided by Palgrave Macmillan in its journal Staff Papers - International Monetary Fund.
Volume (Year): 41 (1994)
Issue (Month): 3 (September)
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Web page: http://www.palgrave-journals.com/
Postal: Palgrave Macmillan Journals, Subscription Department, Houndmills, Basingstoke, Hampshire RG21 6XS, UK
Find related papers by JEL classification:
- D40 - Microeconomics - - Market Structure and Pricing - - - General
- P22 - Economic Systems - - Socialist Systems and Transition Economies - - - Prices
- P23 - Economic Systems - - Socialist Systems and Transition Economies - - - Factor and Product Markets; Industry Studies; Population
- P31 - Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions
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