GENERALIZED RATIONING THEORY
| DOI | http://doi.org/10.1111/j.1467-9485.1991.tb00322.x |
| Author | William A. Jackson |
| Date | 01 November 1991 |
| Published date | 01 November 1991 |
Scorrish
Journal
of
Polilical
Economy,
Vol.
38.
No.
4,
November
1991
@
1991
Scottish
Economic
Society
GENERALIZED RATIONING THEORY
WILLIAM
A.
JACKSON
Department
of
Economics
and Related Studies, University
of
York
I
INTRODUCTION
If rationing is interpreted broadly, then consumers can be said to be rationed
when they face binding constraints beyond the usual budget constraint. Con-
sumption decisions are not constrained just by income, and consumers
have less freedom
of
choice than is suggested by the conventional neoclassical
model. Additional constraints can arise, for example, from the allocation
of
time, from spatial or environmental restrictions, from past consumption
decisions, or from government policy. Other constraints may denote social or
institutional influences on consumption, such as social norms or pressures, or
advertising.
A
rationed method is relevant whenever consumption is exposed
to external limitation or encouragement.
Theoretical discussion has focused mainly on single-good rations, which, if
binding, dictate the consumption
of
the good concerned. Rationing theory
originated in Rothbarth (1940), with the notion
of
‘virtual prices’ at which a
ration is voluntarily chosen by consumers. The theory was later elaborated to
consider demand elasticities under rationing (Tobin and Houthakker, 195 l),
and early work on rationing was surveyed in Tobin (1952). Since then duality
methods have provided
a
more sophisticated treatment
of
rationing (Neary and
Roberts, 1980; Latham, 1980; Deaton, 1981; Deaton and Muellbauer, 1981),
although the emphasis has still been on the single-good case.
Constraints involving several goods are distinct from single-good rations in
that they permit a choice
of
rationed goods and thus variations in the way that
constraints can be satisfied. To deal with these constraints the duality approach
to rationing has to be generalized, as in Section
I1
below. Section
111
discusses
the relevance
of
rationing theory, and Section
IV
concludes.
RATIONING THEORY
WITH
GENERAL
FUNCTIONAL
CONSTRAINTS
The framework is that
of
neoclassical consumer theory, in which an individual
chooses the consumption of Hgoods,
XI,
...,
XH,
to maximize
a
strictly
increasing, strictly quasi-concave, differentiable utility function,
U(x1,
.
..,
XH),
Date
of
receipt
of
final manuscript: 17th July
1990.
335
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