ABSTRACT
The enterprise or firm in a socialist planned economy may frequently find itself constrained in two ways: on the one hand, it is obligated to produce an output level that is as close as possible to a target level Q* and, on the other hand, it may find that it cannot obtain all the inputs it desires for production. Since inputs are not necessarily rationed at all times, the firm may wish to purchase inputs earlier than would be necessary in the absence of rationing, if at the earlier time they are available with no restrictions. Kornai (1979, 1980, 1985) has argued that such anticipatory purchases exacerbate conditions of shortage, since even in periods in which the supply of inputs would otherwise be plentiful, firms will make anticipatory purchases and eliminate the potential surplus of the input commodity in question.
