Question

What kinds of rationing mechanisms would develop to allocate the few apartments that are available?

Answer 1

When there are fewer apartments available, different types of mechanisms can be adopted to allocate them. They are as below:

1. Pricing mechanism: Let markets allocate apartments through demand and supply forces. Those who value them most would pay for them and get them

2. Non pricing Mechanisms like coupons, first come first serve, lottery etc.

Government can distribute coupons through lottery system or first come first serve basis.

These mechanisms will help allocate the fewer apartments in the market.