Seth Giertz wrote:>
>... for a given supply curve and given demand curve, the
> shortage is greater the lower the price ceiling.
>
> And, as the price ceiling is lowered, both the size of the shortage and
> the queue increase
Yes; that is precisely why people are misled!
What the analysis indicates is that the increase in the shortage is
*not* what makes the queue longer even though both the shortage and the
queue typically increase as the controlled price falls. Indeed, it is
not hard to draw supply and demand curves where the queue gets *much*
longer as the controlled price falls while the shortage increases only
slightly or (in the limit) not at all. Just draw the supply and demand
curves so they become more inelastic the lower the price.
Alex
--
Dr. Alexander Tabarrok
Vice President and Director of Research
The Independent Institute
100 Swan Way
Oakland, CA, 94621-1428
Tel. 510-632-1366, FAX: 510-568-6040
Email: [EMAIL PROTECTED]
