Consumer Demand in a System of Partial Rationing and Dual Pricing

Theoretical issues related to rationing and dual pricing have assumed importance for many developing countries where rationing of certain critical commodities at subsidized prices coexists with conventional unrestricted markets for the same commodities. This paper attempts to extend and elucidate recent developments in this area. It also analyses the effects of resale of rationed goods at higher prices and to derive an aggregate demand function based on the Stone-Geary utility function.