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Revision as of 01:45, 14 July 2004 by Jdevine (talk | contribs)(diff) ← Previous revision | Latest revision (diff) | Newer revision → (diff)Rationing is the controlled distribution of resources and scarce goods or services: it restricts how much people are allowed to buy or consume. Rationing, for whatever reason, controls the size of the ration, one's allotted portion of the resources being distributed on a particular day or at a particular time. In economics, it is often common to use the word rationing to refer to one of the roles that prices play in markets, while rationing (as the word is usually used) is called "non-price rationing." Below, we discuss only the latter, dropping the "non-price" qualifier, to refer only to marketing done by authorities of some sort.
Rationing has long been used in the military, especially the navy, to make supplies last for a defined duration, such as a voyage. To ration the supplies, they are divided up into equal portions for each person for each day, or even a meal, over the expected voyage period. The objective is to ensure that each person receives a fair share of supplies throughout the voyage. Often some reserve was also held. If supplies ran short or the voyage went longer than expected, the ration portions would be reduced. For Example: Half Rations means the portions are cut in half, making the supplies last twice as long.
Rationing is often instituted during wartime for civilians as well. (For example, each person may be given "ration coupons" allowing him or her to purchase a certain amount of a product each month.) Rationing often includes food and other necessities for which there is a shortage, including materials needed for the war effort such as rubber tires, leather shoes, clothing and gasoline. Towards the end of the First World War, panic buying in Britain prompted rationing of first sugar, then meat, for the rest of the war. During World War II rationing existed in many countries including Britain and the United States. The British Ministry of Food refined the process in the early 1940s to ensure the population did not starve when food imports were severely restricted and local production limited due to the large number of men fighting the war. Rationing did not end in Britain until the 1950s – see also British cuisine.
In market economics, rationing artificially restricts demand. It is done to keep price below the equilibrium (market-clearing) price determined by the process of supply and demand in an unfettered market.
A reason for setting the price lower than would clear the market may be that there is a shortage, which drives the market price very high. High prices, especially in the case of necessities, are unacceptable with regard to those who cannot afford them. In war-time it is usually imperative for a government to maintain the support of this part of the population, to maintain "equality of sacrifice," especially since in most countries, the working-class and poor families contribute most of the soldiers.
An example of rationing in the face of rising prices took place in the Netherlands, where there was rationing of gasoline in the 1973 energy crisis.
Rationing using coupons is only one kind of non-price rationing. For example, scarce products can be rationed using queues. This is seen, for example, at amusement parks, where one pays a single price to get in and then need not pay any price to go on the rides. Similarly, in the absence of road pricing, which is infeasible in many cases, access to roads is rationed in a first come, first serve queueing process, leading to congestion.