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Paying vs. waiting in the pursuit of specific egalitarianism

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  • Jeremy Clark
  • Bonggeun Kim

Abstract

We propose an allocation mechanism for publicly providing a private good such that the final allocation is independent of income yet increasing in strength of preference or need. The 'pay or wait' mechanism consists of offering the good for sale at two outlets. The 'queuing' outlet charges a low money price, but high waiting time per unit. The 'pricing' outlet charges a relatively high money price with rapid service. High wage individuals will opt for the pricing outlet, and low wage individuals the queuing outlet. If the policy maker stocks the outlets in proportion to the distribution of wage earners in the population, consumers of both wages will purchase the same amount on average, while those who value the good more relative to other goods will receive more of it. These outcomes are at risk if the good can be resold, but may be preserved if the policy maker can create transactions costs associated with resale. Copyright 2007 , Oxford University Press.

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Bibliographic Info

Article provided by Oxford University Press in its journal Oxford Economic Papers.

Volume (Year): 59 (2007)
Issue (Month): 3 (July)
Pages: 486-512

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Handle: RePEc:oup:oxecpp:v:59:y:2007:i:3:p:486-512

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  1. Bruce, Neil & Waldman, Michael, 1991. "Transfers in Kind: Why They Can Be Efficient and Nonpaternalistic," American Economic Review, American Economic Association, American Economic Association, vol. 81(5), pages 1345-51, December.
  2. Michael Alexeev & James Leitzel, 1999. "Income Distribution and Price Controls: Targeting a Social Safety Net During Economic Transition," William Davidson Institute Working Papers Series, William Davidson Institute at the University of Michigan 281, William Davidson Institute at the University of Michigan.
  3. Boadway, Robin & Marchand, Maurice, 1995. "The Use of Public Expenditures for Redistributive Purposes," Oxford Economic Papers, Oxford University Press, Oxford University Press, vol. 47(1), pages 45-59, January.
  4. Suen, Wing, 1989. "Rationing and Rent Dissipation in the Presence of Heterogeneous Individuals," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 97(6), pages 1384-94, December.
  5. Holt, Charles A, Jr & Sherman, Roger, 1982. "Waiting-Line Auctions," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 90(2), pages 280-94, April.
  6. Sah, Raaj Kumar, 1987. "Queues, Rations, and Market: Comparisons of Outcomes for the Poor and the Rich," American Economic Review, American Economic Association, American Economic Association, vol. 77(1), pages 69-77, March.
  7. Nichols, D & Smolensky, E & Tideman, T N, 1971. "Discrimination by Waiting Time in Merit Goods," American Economic Review, American Economic Association, American Economic Association, vol. 61(3), pages 312-23, June.
  8. Barzel, Yoram, 1974. "A Theory of Rationing by Waiting," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 17(1), pages 73-95, April.
  9. Stahl, Dale II & Alexeev, Michael, 1985. "The influence of black markets on a queue-rationed centrally planned economy," Journal of Economic Theory, Elsevier, Elsevier, vol. 35(2), pages 234-250, August.
  10. Jeremy Clark & Bonggeun Kim, 2006. "Differential Time and Money Pricing as a Mechanism for In-kind Redistribution," Working Papers in Economics, University of Canterbury, Department of Economics and Finance 06/07, University of Canterbury, Department of Economics and Finance.
  11. Sam Bucovetsky, 1984. "On the Use of Distributional Waits," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 17(4), pages 699-717, November.
  12. Blomquist, Suren & Christiansen, Vidar, 1995. " Public Provision of Private Goods as a Redistributive Device in an Optimum Income Tax Model," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 97(4), pages 547-67, December.
  13. Weitzman, Martin L, 1991. "Price Distortion and Shortage Deformation, or What Happened to the Soap?," American Economic Review, American Economic Association, American Economic Association, vol. 81(3), pages 401-14, June.
  14. Blackorby, Charles & Donaldson, David, 1988. "Cash versus Kind, Self-selection, and Efficient Transfers," American Economic Review, American Economic Association, American Economic Association, vol. 78(4), pages 691-700, September.
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Cited by:
  1. Jeremy Clark & Bonggeun Kim, 2006. "Differential Time and Money Pricing as a Mechanism for In-kind Redistribution," Working Papers in Economics, University of Canterbury, Department of Economics and Finance 06/07, University of Canterbury, Department of Economics and Finance.

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