South-Western College Publishing - Economics  

Mickey the Red
Subject Economic Fundamentals
Topic(s) Comparative Systems; Capitalism; Socialism
Key Words Socialism, Capitalism, Rationing, First-Come First-Served
News Story

With the demise of the Soviet Union and the transition to capitalism in most of the former communist countries, it is becoming increasingly difficult to point to real-world examples of the differences between capitalism and socialism until you go to Disneyland.

In market economies goods are rationed by price. If prices are flexible, queues will not appear. Now consider Disneyland. In Disneyland scarce goods--rides on the Disneyland attractions--are rationed by a first-come, first-served basis. As a result, Disneyland patrons frequently face very long lines for the rides. And whereas in the Soviet Union queues were regarded as a symbol of failure, queues at Disneyland appear to reflect the relative attractiveness of the ride.

There is some evidence that gray markets are developing; introducing market prices in place of time spent waiting in line. Disney is selling hotel packages and special entrance tickets that allow visitors to enter Disneyland an hour or two before the official morning start. Guided tours at an additional cost provide reserved seating at other attractions. Some corporations that sponsor exhibits are getting special access to rides and exhibits.

Do gray markets and special access signal the demise of Disney socialism? Not yet. Disneyland is still doing well and customers are not yet writing their Congressmen.

Questions
  1. Assume the market price of a good was below the equilibrium price. Describe the adjustments in consumer and producer behavior that would take place.
  2. Suppose instead that the market price was not permitted to adjust. What would you expect to see happen in this market.
  3. What is a black market? Why do black markets arise?
Source Peter Passell, "Economic Scene: Socialism and its long lines are alive and well at Disneyland," the New York Times, April 2, 1998.

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