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Original Articles

The efficiency of the price system: evidence from an alternative market

Pages 703-706 | Published online: 06 Oct 2010
 

Abstract

Most economists take it for granted that a price mechanism is usually the most effective means of resource allocation. This paper compares two methods of allocating resources in the thoroughbred racing market: a price mechanism and bureaucratic restrictions. It is shown that a simple price mechanism does a superior job of allocating racing ability than a myriad of conditions and restrictions set by even a highly informed expert.

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