Janos kornai wikipedia

Centrally-planned economies with chronic shortages of various goods

"Shortage economy" (Polish: gospodarka niedoboru, Hungarian: hiánygazdaság) is a term coined by Hungarian economist János Kornai, who used this term to criticize the old centrally-planned economies of the communist states of the Eastern Bloc.

Janos kornai wikipedia

In his monograph Economics of Shortage (), Kornai argued that the chronic shortages seen throughout Central and Eastern Europe in the late s (and which continued during the s) were not the consequences of planners' errors, but rather systemic flaws.

A shortage of a certain item does not necessarily mean that the item is not being produced; rather, it means that the amount of the good demanded exceeds the amount supplied at a given price (see supply and demand). This may be caused by a government-enforced low price which encourages consumers to demand a higher amount than is supplied.

However, Kornai concentrated on the role of reduced supply and a