Oil mark theorem

oil mark theorem (also oil mark theory) is a designation for the acceptance that a national interference causes partially drastic effects into a certain market on other markets, formulated by economist walter Eucken, what again national interferences pulls. Eucken compared the national interference with an oil mark, which continues to expand always, as soon as it affects the water surface.

An example are housing rents: If these are limited upward (top price), for example as measure of the social politics, at short notice the price for rented dwelling sinks relative to other goods. For potential landlords that works rather deterring, therefore they build fewer houses and recondition existing houses more rarely. Thus dwelling becomes medium-term scarce. The goal of the government of creating cheap dwelling is missed.

On the one hand now the state must intervene and increase by subsidies the production of dwelling. On the other hand the knappe dwelling must be distributed. Either this is done via rationing over the state - which favours the corruption. Or dwellings are further privately obtained. Since rents no more than market prices do not function, the potential tenants will illegaly more pay, in order to convince the landlord. The signal function of the price (as indicator for scarceness) is lost and becomes by others - more discriminating - factors like illegal cash payments, appearance, complaisances, friendships, religious opinion etc. replaced.

Besides the state must foresee possible alternate actions for the security of its measures. For example if wheat producers are kept by minimum prices protected, the wheat price thus artificially highly, that has effects on the market for rye or oats, since the demands (after now relatively cheaper grain) rises there. On the market for wheat develops however an offer in excess, which can be diminished not by market forces and therefore to further national interferences lead must.

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