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| The Optimal Allocation of Relief Material: Free Trade, Price Limitation or Government Supply |
| YAO Dongmin，LAN Shuqin，YIN Ying，ZHANG Pengyuan |
| Central University of Finance and Economics, Beijing, China |
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Abstract To find the optimal mode of disaster relief material allocation, this study establishes the material supply and demand model and compares the effects of different allocation modes selected by the government in different disaster areas from the perspective of consumer surplus. The results show that whether it is administrative order, market mechanism or a mixture of the two, different allocation modes may become the optimal choice under specific circumstances, there is no “one size fits all” optimal allocation mode. The choice of optimal allocation mode is affected by a combination of factors such as the proportion of disaster areas, supply and demand elasticity, financial capacity and government supervision. For minor disasters, the government shall distribute materials free of charge to disaster areas and allocate materials through the market in non-disaster areas. For serious disasters, the government with large financial capacity should distribute materials free of charge to the disaster areas and allocate materials through price limit intervention in non-disaster areas, while for the government with small financial capacity, it should allocate materials through the market under the supervision of the government for all regions.
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Received: 14 March 2021
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