A theory of shortage in socialist economies based on the “soft budget constraint”.

Given the costs of resource misallocation when prices are set too low, economists have wondered why governments do not raise prices to eliminate shortages altogether. A mathematical model suggests that the “soft budget constraint” common to state-owned firms in socialist economies is the reason tha...

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Bibliographic Details

Published in:	American Economic Review Vol. 84; pp. 145 - 157
Main Author:	Qian, Yingyi
Format:	Article
Published:	American Economic Association March 1994
Subjects:	Mathematical models Scarcity Financing of government business enterprises Central economic planning Resource allocation > Mathematical models Communist countries Economic policy
Online Access:	View this record in EBSCOhost