Managerial Economics 12th Edition by Mark Hirschey

Exercise 6

A pipeline break reduced the supply of gasoline to the Phoenix, Arizona, area in August 2003. Press reports indicated that some stations ran out of gasoline, consumers waited in line for hours, and some drivers started following gasoline tankers as they made their deliveries. Explain the efficiency and equity considerations tied to a competitive-market allocation of supply versus government-controlled rationing in such circumstances.