An Equilibrium Theory of Rationing.

Working paper

Setting a price that results in rationing may be optimal for a seller whose customers must make a specific investment to be able to use his product. Although rationing results in ex post inefficiency, the resulting distribution of ex post surplus compensates consumers for their transaction-specific costs, while allowing the seller to earn higher profits than with market-clearing prices. Committing to a single price, and rationing if there is excess demand, can be more profitable than setting ...

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Authors: Gilbert, R; Klemperer, P

• Publisher: CEPR
• Host title: C.E.P.R.Discussion Papers
• Series: C.E.P.R.Discussion Papers
• Volume: 805
• Publication date: 1993-01-01
• Paper number: 805
• Language: English