Shortages under Free Prices: The Case of Ukraine in 1992

Alexander Sundakov, Rolando Ossowski and Timothy D. Lane
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Alexander Sundakov: International Monetary Fund
Rolando Ossowski: International Monetary Fund
Timothy D. Lane: International Monetary Fund

IMF Staff Papers, 1994, vol. 41, issue 3, 411-434

Abstract: This 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.

JEL-codes: D40 P22 P23 P31 (search for similar items in EconPapers)
Date: 1994
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Persistent link: https://EconPapers.repec.org/RePEc:pal:imfstp:v:41:y:1994:i:3:p:411-434

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