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In-Kind Distribution, Uncertainty, and Merit Wants: a Simple Model

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  • Alistair Munro

    (University of East Anglia)

Abstract

This article considers the direct provision of merit goods when consumers and the government hold different sets of beliefs about the likelihood of uncertain events. In a simple model, it is shown that direct provision of the good can outperform tax and subsidy systems when consumers differ only in their beliefs. However, when agents differ in other characteristics, it is demonstrated that transfers in-kind need not raise welfare.

Suggested Citation

  • Alistair Munro, 1992. "In-Kind Distribution, Uncertainty, and Merit Wants: a Simple Model," Public Finance Review, , vol. 20(2), pages 175-194, April.
    • Handle: RePEc:sae:pubfin:v:20:y:1992:i:2:p:175-194
    DOI: 10.1177/109114219202000203
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    References listed on IDEAS

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    1. Martin L. Weitzman, 1977. "Is the Price System or Rationing More Effective in Getting a Commodity to Those Who Need It Most?," Bell Journal of Economics, The RAND Corporation, vol. 8(2), pages 517-524, Autumn.
    2. Akerlof, George A & Dickens, William T, 1982. "The Economic Consequences of Cognitive Dissonance," American Economic Review, American Economic Association, vol. 72(3), pages 307-319, June.
    3. Neary, J. P. & Roberts, K. W. S., 1980. "The theory of household behaviour under rationing," European Economic Review, Elsevier, vol. 13(1), pages 25-42, January.
    4. Sandmo, Agnar, 1983. "Ex Post Welfare Economics and the Theory of Merit Goods," Economica, London School of Economics and Political Science, vol. 50(197), pages 19-33, February.
    5. Hellwig, Martin F., 1986. "The optimal linear income tax revisited," Journal of Public Economics, Elsevier, vol. 31(2), pages 163-179, November.
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    Cited by:

    1. Conning, Jonathan & Kevane, Michael, 2002. "Community-Based Targeting Mechanisms for Social Safety Nets: A Critical Review," World Development, Elsevier, vol. 30(3), pages 375-394, March.
    2. Elodie Brahic & Valérie Clément & Nathalie Moureau & Marion Vidal, 2008. "A la recherche des Merit Goods," Working Papers 08-08, LAMETA, Universtiy of Montpellier, revised Jun 2008.

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