The influence of black markets on a queue-rationed centrally planned economy (Q1062891)
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English | The influence of black markets on a queue-rationed centrally planned economy |
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The influence of black markets on a queue-rationed centrally planned economy (English)
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1985
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In centrally planned economies in which prices are fixed, and the rationing mechanism is waiting line queues, we show that an equilibrium of waiting times exists. We then introduce a ''black market'' in which individuals can trade commodities that they have acquired through the official economy. An equilibrium of black market prices and waiting times is shown to exist; further, the economy with a black market is ''queue- efficient.'' However, the introduction of black markets is not necessarily a Pareto improvement over an economy without black markets (even when we allow winners to compensate losers).
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centrally planned economies
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waiting line queues
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equilibrium of waiting times
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black market
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