In order to alleviate long queues, which deprive buyers of time that could have been allocated to productive work, authorities may issue ration tickets to politically favored buyers. If buying and selling of these tickets is permitted, they become in effect a second money. Because a portion of buyers' payments is received by ration-ticket sellers rather than sellers of the original good (e. g., cows), the supply problem remains unaddressed. Because of this artificially limited supply, the higher total expenses for buyers, including the cost of the tickets, may very well exceed the prices that they would have paid in a free market. Additional inefficiencies and confusion are introduced by the dual monetary system. On the other hand, if the trading of ration tickets is legally prohibited, then they are likely to be traded in the black market, with consequences similar to those noted on the previous page.

Rent controls are a special case of maximum price controls, limiting the payments that can be rendered for the use of housing (especially apartments) over specified periods of time. In the short term, rent controls create a shortage of available adequate housing; in the long run, they discourage the building and maintenance of new housing units.      Next page


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