The Political Temptations of Rationing by Insiders

George von Furstenberg and Nicholas O Spangenberg

Public Choice, 1996, vol. 88, issue 1-2, 69-81

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

Date: 1996
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