Following the seminal work of Fair and Jaffee (1972), econometric methods for disequilibrium markets have been extended in recent papers by Maddala and Nelson (1974), Hartley (1976), Goldfeld and Quandt (1972), Oourieroux et al. (1980) and Ito (1980). For the most part attention has been restricted to fixed price models and endogenous price formulations characterized by insufficient equilibrium for market clearing. Recently several studies have developed procedures for dealing with markets characterized by the existence of price barriers (Maddala (1983), Chambers et al. (1980)and Quandt (1981)). In these cases, competitive market adjustment mechanisms are sometimes fully operative but are also often bounded by an accumulation point in the form of one-sided price barriers. Since price barriers are usually set administratively, there is no a priori reason to expect correspondence to market clearing or equilibrium prices. Hence, disequilibria may or may not occur in markets where competitive adjustments are constrained by the existence of price barriers. Specifically, excess supply may be anticipated in a competitive market if a minimum price is established which is higher than the market clearing price.
This paper develops and demonstrates the asymptotic properties of a limited information estimation technique that can be applied to a variety of situations where price barriers exist. The proposed estimator is particularly valuable in those instances where the existing price barriers are not observable from collected data. [ABSTRACT FROM AUTHOR]