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Research an example of rationing that took place in either the United States or another country. Under what circumstances was rationing implemented? What effect did rationing have on the economy? Was rationing an effective way to allocate goods and services in this particular situation? Write a two-page essay to explain your findings.
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VerifiedA clear example that the establishment of rationing by governments does not work is the case of Venezuela, which in 2020 its government of socialist ideology imposed restrictions on the purchase of gasoline throughout the national territory.
During the mid 1970s, gasoline rationing was instituted in the US while the country was facing a major energy crisis. It was initially administered by allowing even number license plate owners to buy gasoline on even days of the month, and odd number owners to buy gasoline on odd days. Further plans to continue with coupons were scrapped once the rationing proved to be too ineffective.
The economy responded by a movement away from gasoline as peoples limited their driving as much as possible, and relied on public transportation much more. Automobile companies however were not incentivized to innovate in that direction, as the levels of demand were kept artificially propped up.
It ultimately did not turn out to be overall effective because of how distorted the usual market incentives became and because it was so difficult to maintain the administration of the program. Citizens of all gas consumption levels were immediately up in arms about the fairness of the rationing, each with an argument as to why they should receive more rations and others less. The cost of paying workers and creating (gameable) coupons made the system even more prohibitive.
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