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The Political Temptations of Rationing by Insiders

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  • von Furstenberg, George M
  • Spangenberg, Nicholas O

Abstract

Long waits for goods, services, and jobs to become available still exist in and to the east of Europe. This paper explores the political economy of what has made pervasive rationing an attractive way to cope with shocks in the past. The explanation advanced lies not in the creation of shortage rents for the personal profit of corrupt insiders controlling the production and distribution process. Instead, rationing with queuing is viewed as a 'populist' scheme that allows a majority to keep its wages above levels that would clear the labor market, while hiding the cost of such a policy, increased unemployment. Copyright 1996 by Kluwer Academic Publishers

Suggested Citation

  • von Furstenberg, George M & Spangenberg, Nicholas O, 1996. "The Political Temptations of Rationing by Insiders," Public Choice, Springer, vol. 88(1-2), pages 69-81, July.
    • Handle: RePEc:kap:pubcho:v:88:y:1996:i:1-2:p:69-81
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    References listed on IDEAS

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    1. Darby, Michael R., 1976. "Price and wage controls: The first two years," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 2(1), pages 235-263, January.
    2. Kornai, Janos, 1992. "The Socialist System: The Political Economy of Communism," OUP Catalogue, Oxford University Press, number 9780198287766.
    3. Osband, Kent, 1992. "Economic Crisis in a Shortage Economy," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 673-690, August.
    4. Levy, David M, 1990. "The Bias in Centrally Planned Prices," Public Choice, Springer, vol. 67(3), pages 213-226, December.
    5. John Fender & Derek Laing, 1993. "A Macro Model of Queuing and Resale in a Transition Economy," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 35(2), pages 1-17, July.
    6. Fernandez, Raquel & Rodrik, Dani, 1991. "Resistance to Reform: Status Quo Bias in the Presence of Individual-Specific Uncertainty," American Economic Review, American Economic Association, vol. 81(5), pages 1146-1155, December.
    7. Polterovich, Victor, 1993. "Rationing, Queues, and Black Markets," Econometrica, Econometric Society, vol. 61(1), pages 1-28, January.
    8. Guillermo A. Calvo & Fabrizio Coricelli, 1993. "Output Collapse in Eastern Europe: The Role of Credit," IMF Staff Papers, Palgrave Macmillan, vol. 40(1), pages 32-52, March.
    9. Andrei Shleifer & Robert Vishny, 1992. "Pervasive Shortages under Socialism," RAND Journal of Economics, The RAND Corporation, vol. 23(2), pages 237-246, Summer.
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    Cited by:

    1. Amitrajeet A. Batabyal & Hamid Beladi, 2008. "Bribery and Favoritism in Queuing Models of Rationed Resource Allocation," Journal of Theoretical Politics, , vol. 20(3), pages 329-338, July.

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