Rationing

Rationing is the controlled distribution of scarce resources, goods, services, or an artificial restriction of demand. Rationing controls the size of the ration, which is one's allowed portion of the resources being distributed on a particular day or at a particular time. There are many forms of rationing, although rationing by price is most prevalent. Rationing is often done to keep price below the market-clearing price determined by the process of

supply and demand In microeconomics, supply and demand is an economic model of price determination in a market. It postulates that, holding all else equal, in a competitive market, the unit price for a particular good, or other traded item such as labo ...

in an unfettered market. Thus, rationing can be complementary to

price controls Price controls are restrictions set in place and enforced by governments, on the prices that can be charged for goods and services in a market. The intent behind implementing such controls can stem from the desire to maintain affordability of good ...

. An example of rationing in the face of rising prices took place in the various countries where there was rationing of gasoline during the

1973 energy crisis The 1973 oil crisis or first oil crisis began in October 1973 when the members of the Organization of Arab Petroleum Exporting Countries (OAPEC), led by Saudi Arabia, proclaimed an oil embargo. The embargo was targeted at nations that had sup ...

. A reason for setting the price lower than would clear the market may be that there is a shortage, which would drive the market price very high. High prices, especially in the case of necessities, are undesirable with regard to those who cannot afford them. Traditionalist economists argue, however, that high prices act to reduce waste of the scarce resource while also providing incentive to produce more. Rationing using

ration stamp A ration stamp, ration coupon or ration card is a stamp or card issued by a government to allow the holder to obtain food or other commodities that are in short supply during wartime or in other emergency situations when rationing is in fo ...

s is only one kind of non-price rationing. For example,

scarce In economics, scarcity "refers to the basic fact of life that there exists only a finite amount of human and nonhuman resources which the best technical knowledge is capable of using to produce only limited maximum amounts of each economic good ...

products can be rationed using queues. This is seen, for example, at

amusement park An amusement park is a park that features