THE WELFARE COSTS OF PRICE CONTROLS FOR CARS AND COLOR TELEVISIONS INPOLAND - CONTRASTING ESTIMATES OF RENT-SEEKING FROM RECENT EXPERIENCE

The welfare costs of price controls can vary enormously, depending on the method of allocating the good in shortage and the possible rent-se eking costs that may result. With full rent dissipation, the welfare l oss from price controls on Polish color televisions in 1989 was about ten times the standard estimates of distortion costs, which ignore ren t-seeking, and was more than 100 percent of the value of domestic prod ucers' sales. The methods of allocating cars, however, did not result in rent-seeking costs. The domestic price controls were an unintended implicit subsidy to imports. Subsidies for cars were estimated at 43 p ercent and for color televisions at 22 percent.