What other customers are willing to pay for your products is very much the opportunity cost to you. (Price is trade-off)
Price forces you to think about others; high price encourages more supply.
Possible ways to ration rather than price rationing
(1)Need
Question: Who determines who is needy? What's needy? How do you convey information to producers to make more of some goods or less of another based on change in perceived need?
This ration is costly, invasive, no way to ensure people who are needy to get the stuff.
(2)Queue
You spend time and energy, which is the opportunity cost
(3)Lottery
It may stimulates conspiracy
(4)Equal shares
Question 1. What if the good cannot be cut off? 2. What if the people who want the stuff are too many?
(5)Fight and force
Question: 1. too costly (you need to exercise to make sure you can win the fight; you need to see doctors) 2. hard to plan
(6)Merit
Problem: 1. you need a judgment 2. you may not trust him
Competition derives from scarcity
Every ration mechanism imposes a set of rules on people and then people compete according to rules but you compete because things are scarce and you want them.
The rules that we come up with to deal that competition aren't themselves the cost of competition. We should focus on whether the rules we come up with promote competition for the goods that is destructive or constructive.
Willingness to pay a money price is the best way indicator of the value of a good to someone, and allocating goods via the price system and relying on willingness to pay is the only just way to ration scarce goods.When you fail to bid what you want, you are still left with the goods and services you had to create before and you can still consume other goods.
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