Excess Demand and Rationing: Selling to an Input

Lutz-Alexander Busch and Phil Curry

Discussion Papers from Department of Economics, Simon Fraser University

Abstract: This paper develops a model that explains the persistence of excess demand for some goods. It offers that, for some goods, consumers care about who else is consuming the good. As such, their willingness to pay depends on their beliefs about the other consumers. We demonstrate that screening mechanisms that impose costs in negative correlation to an individual's (positive) externality can increase profits while appearing to generate excess demand. We feel that such a model is appropriate in that casual observation seems to indicate that it does well in predicting which goods would use such a screening mechanism and which would not.

Keywords: excess demand; distributional waits; scalping; pricing (search for similar items in EconPapers)
JEL-codes: K42 L11 (search for similar items in EconPapers)
Pages: 17
Date: 2007-06
New Economics Papers: this item is included in nep-law and nep-mkt
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