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Notes and Comments: Consumer Aspects of Price Instability

Frederick V. Waugh

Abstract

A recent series of papers in Econometrica analyzed the effects of price stabilization upon producers. The analyses and conclusions of this series were remarkably similar to those of a series of papers published in the Quarterly Journal of Economics some twenty years ago, dealing with the effects of price stabilization upon consumers. That series demonstrated that price stabilization itself is neither a blessing nor a burden upon consumers. In a sense, each individual consumer loses if prices are stabilized at or above the simple, unweighted arithmetic average of the varying prices. In a similar sense, each individual consumer gains if prices are stabilized at or below the weighted means of the varying prices.