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The Welfare Costs of Rationing by Waiting

Author

Listed:
  • Deacon, Robert T
  • Sonstelie, Jon

Abstract

With price controls and rationing by waiting, rational consumers increase the quantity bought per purchase. This individually rational response is socially wasteful and the cost of making it is a deadweight loss. This cost plus the value of time spent in queues may exceed the total rent transferred from suppliers to consumers by price controls, i.e., the value of resources spent competing for the rent may exceed the rent itself. This point is illustrated by an empirical application to gasoline price controls. Rent seeking exhausts an estimated 116 percent of the rent transferred. Copyright 1989 by Oxford University Press.

Suggested Citation

  • Deacon, Robert T & Sonstelie, Jon, 1989. "The Welfare Costs of Rationing by Waiting," Economic Inquiry, Western Economic Association International, vol. 27(2), pages 179-196, April.
    • Handle: RePEc:oup:ecinqu:v:27:y:1989:i:2:p:179-96
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    Cited by:

    1. LaPlue, Lawrence D., 2022. "Environmental consequences of natural gas wellhead pricing deregulation," Journal of Environmental Economics and Management, Elsevier, vol. 116(C).
    2. Fleck, Robert K., 2014. "Can prohibitions on “price gouging” reduce deadweight losses?," International Review of Law and Economics, Elsevier, vol. 37(C), pages 100-107.
    3. Maria Arbatskaya & Kaushik Mukhopadhaya & Eric Rasmusen, 2001. "The Parking Lot Problem," CIRJE F-Series CIRJE-F-119, CIRJE, Faculty of Economics, University of Tokyo.
      • Maria Arbatskaya & Kaushik Mukhopadhaya & Eric Rasmusen, 2007. "The Parking Lot Problem," Working Papers 2007-04, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    4. Rik Chakraborti & Gavin Roberts, 2023. "How price-gouging regulation undermined COVID-19 mitigation: county-level evidence of unintended consequences," Public Choice, Springer, vol. 196(1), pages 51-83, July.
    5. Edward L. Glaeser, 1996. "The Social Costs of Rent Control Revisited," NBER Working Papers 5441, National Bureau of Economic Research, Inc.
    6. Luttmer Erzo F.P., 2007. "Does the Minimum Wage Cause Inefficient Rationing?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-42, October.
    7. Besley, Timothy & Hall, John & Preston, Ian, 1999. "The demand for private health insurance: do waiting lists matter?," Journal of Public Economics, Elsevier, vol. 72(2), pages 155-181, May.
    8. Akbar Marvasti, 2006. "A Contingent Valuation of Customer Delay in Medical Services," Eastern Economic Journal, Eastern Economic Association, vol. 32(1), pages 31-45, Winter.
    9. Lui, Hon-Kwong & Suen, Wing, 2011. "The effects of public housing on internal mobility in Hong Kong," Journal of Housing Economics, Elsevier, vol. 20(1), pages 15-29, March.
    10. Edward L. Glaeser & Erzo F. P. Luttmer, 2003. "The Misallocation of Housing Under Rent Control," American Economic Review, American Economic Association, vol. 93(4), pages 1027-1046, September.
    11. Mireia Jofre-Bonet, 2000. "Public health care and private insurance demand: The waiting time as a link," Health Care Management Science, Springer, vol. 3(1), pages 51-71, January.
    12. Franz Hubert, 1993. "The Impact of Rent Control on Rents in the Free Sector," Urban Studies, Urban Studies Journal Limited, vol. 30(1), pages 51-61, February.
    13. Parry, Ian, 2001. "On the Efficiency of Public and Private Health Care Systems: An Application to Alternative Health Policies in the United Kingdom," RFF Working Paper Series dp-01-07, Resources for the Future.
    14. Rik Chakraborti & Gavin Roberts, 2020. "Anti-Gouging Laws, Shortages, and COVID-19: Insights from Consumer Searches," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 35(Winter 20), pages 1-20.
    15. Elsa Marques & Sian Noble & Ashley W. Blom & William Hollingworth, 2014. "Disclosing Total Waiting Times For Joint Replacement: Evidence From The English Nhs Using Linked Hes Data," Health Economics, John Wiley & Sons, Ltd., vol. 23(7), pages 806-820, July.
    16. Debra Moore Patterson, 1996. "Reform in Eastern Europe: A General Equilibrium Model with Distortions in Relative Prices and Factor Markets," Canadian Journal of Economics, Canadian Economics Association, vol. 29(2), pages 457-472, May.
    17. Gerritsen, Aart, 2017. "Equity and efficiency in rationed labor markets," Journal of Public Economics, Elsevier, vol. 153(C), pages 56-68.
    18. Van Ommeren, Jos N. & Van der Vlist, Arno J., 2016. "Households' willingness to pay for public housing," Journal of Urban Economics, Elsevier, vol. 92(C), pages 91-105.
    19. Aart Gerritsen, 2016. "How Many Harberger Triangles Does it Take to Fill one Okun Gap?," Working Papers tax-mpg-rps-2016-05, Max Planck Institute for Tax Law and Public Finance.
    20. Batabyal, Amitrajeet A. & DeAngelo, Gregory J., 2012. "Goods allocation by queuing and the occurrence of violence: A probabilistic analysis," International Review of Economics & Finance, Elsevier, vol. 24(C), pages 1-7.
    21. R. Chakraborti & G. Roberts, 2021. "Learning to Hoard: The Effects of Preexisting and Surprise Price-Gouging Regulation During the COVID-19 Pandemic," Journal of Consumer Policy, Springer, vol. 44(4), pages 507-529, December.
    22. Buschena, David E. & Anderson, Terry L. & Leonard, Jerry L., 2001. "Valuing Non-Marketed Goods: The Case of Elk Permit Lotteries," Journal of Environmental Economics and Management, Elsevier, vol. 41(1), pages 33-43, January.

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