WHICH ALLOCATION SYSTEM IS MORE EFFECTIVE IN GETTING A COMMODITY TO THOSE WHO NEED IT MOST

This study extends Weitzman's analysis of alternative systems for allo cating a commodity. Two systems are compared with Weitzman's price and rationing systems: free access and price controlled. Performance is m easured using Weitzman's criterion of effectiveness in meeting needs, which is the quadratic loss between actual allocations and needs. Alth ough the goal behind free access may be to help meet needs better, the price system's effectiveness may exceed the free access system's. Eff ectiveness under quadratic-loss minimizing price controls always excee ds that of the price system. (C) 1996 Academic Press, Inc.