Rationing in economics involves the controlled allocation of limited resources, goods, or services when demand surpasses supply at current market prices. This mechanism ensures fair distribution, often during emergencies like wars, natural disasters, or economic shortages.

• Governments or regulatory bodies typically enforce rationing to prevent hoarding and promote equity, overriding the natural market process where prices would rise to balance supply and demand.
• By capping the amount individuals or households can acquire, rationing ignores differences in willingness or ability to pay, focusing instead on equal access.
• It manifests as non-price rationing (e.g., quotas or coupons) or price rationing, serving as a deliberate policy tool to address scarcity without depending solely on market forces.

The price rationing function describes how rising prices naturally distribute scarce resources in a free market. When supply falls short of demand, prices increase, deterring lower-priority buyers and channeling goods to those who value them highest and can pay more. This achieves market equilibrium efficiently, conserving resources for optimal uses and avoiding alternatives like queues or fixed limits.