Odd Scheme

by Don Boudreaux on November 12, 2012

in Prices, Reality Is Not Optional, Regulation, Seen and Unseen

Here’s a letter to the New York Post:

Contrary to some of your readers’ comments, rationing gasoline according to whether a license tag ends in an odd or even number depending on the day of the week will not reduce the length of lines at gasoline stations (Letters, Nov. 12).

Suppose that gasoline is in such short supply – and is priced such – that on each day over an eight-day span an average of 1,000 motorists are willing to wait in line for 30 minutes or longer to buy gasoline.  Without the odd-even rationing scheme, on each day roughly 500 queuing motorists will be “evens” and 500 will be “odds.”  Over the entire eight-day span a total of 4,000 “evens” and 4,000 “odds” queue up for a half-hour or longer for gasoline.

Because an “odd-even” rationing scheme does nothing to increase supplies or to reduce motorists’ willingness to wait in line, it changes nothing of significance.  With such a scheme, it remains the case that, over that eight-day span, 4,000 “evens” and 4,000 “odds” are willing to queue up in order to fill up.  An “odd-even” rationing scheme merely ensures that on each of the four “even” days the 1,000 queuing motorists are all “evens,” while on each of the four “odd” days the 1,000 queuing motorists are all “odds.”  The total amount of queuing over this span of days remains unchanged.

Political parlor tricks such as implementing odd-even rationing solve nothing.  Matters will improve only by freeing prices to rise in order to more sensibly allocate existing supplies – and, importantly, to entice entrepreneurs to increase supplies.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

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