[OPE-L] A paper on rationing & price control

From: David Laibman (dlaibman@SCIENCEANDSOCIETY.COM)
Date: Fri Aug 03 2007 - 12:59:18 EDT

Dear OPE comrades,
    I have a problem, and request for suggestions.
    I have attached a PDF file of a paper I am writing, entitled "A Note
on Rationing, Price Control and Consumer Welfare."
    For those who don't want to bother with the entire paper, here is an
"executive summary."  Take an ordinary Cobb-Douglas utility function,
and find the relation between (maximized) utility and money income (the
constraint constant in the consumer's expenditure equation), in two
cases: with, and without, quantity rationing of X and price control.
The curves cross at a crucial value of money income, M*.  Numerical
analysis teases out the value of M* for various values of the
elasticities (of utility with respect to X and Y, "all other goods"),
and of the ratio of the uncontrolled to the controlled price.   Core
conclusion: *even within* the (undoubtedly inadequate) framework of
orthodox utility theory, it emerges that rationing and price control
*help* consumers whose income is below M*, and *hurt* those with incomes
above M*.
    The problem: references.  The attached draft has almost no
references, and I haven't been able to find sources in the literature
that address this.  The model is my own work, based on standard micro,
as found in any intermediate text.  The upper-level texts (Varian,
Layard/Walters, Lancaster, e.g.) seem to have nothing on this.  Some
intermediate texts (David Friedman, e.g.) discuss rationing and price
control, but not in utility-theoretic terms, just with supply and demand
curves, welfare gain and loss rectangles and triangles, and so forth.
And there is a host of journalistic articles on historical instances of
    Any specific references, or suggestions on how to proceed, would be
greatly appreciated.
David Laibman

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