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Substitution in Household Production and the Efficiency of in-Kind Transfers

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  • William R. Johnson

    (University of Virginia)

Abstract

The traditional argument for in-kind transfers rests on their ability to induce greater consumption of externality-causing commodities. This paper shows that this effect will be diminished the greater the possibilities for substitution in household production. The argument rests on the distinction between market goods which can be subsidized and the commodities donors value which are produced in the household. If the price of the market good is reduced through a subsidy, consumers will react in part by producing the commodity with an altered ratio of inputs.

Suggested Citation

  • William R. Johnson, 1978. "Substitution in Household Production and the Efficiency of in-Kind Transfers," Public Finance Review, , vol. 6(2), pages 204-210, April.
    • Handle: RePEc:sae:pubfin:v:6:y:1978:i:2:p:204-210
    DOI: 10.1177/109114217800600204
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    References listed on IDEAS

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    1. Becker, Gary S & Tomes, Nigel, 1976. "Child Endowments and the Quantity and Quality of Children," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 143-162, August.
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    5. Pollak, Robert A & Wachter, Michael L, 1975. "The Relevance of the Household Production Function and Its Implications for the Allocation of Time," Journal of Political Economy, University of Chicago Press, vol. 83(2), pages 255-277, April.
    6. Edgar K. Browning, 1975. "The Externality Argument For In‐Kind Transfers: Some Critical Remarks," Kyklos, Wiley Blackwell, vol. 28(3), pages 526-544, August.
    7. Browning, Edgar K, 1975. "The Externality Argument for In-Kind Transfers: Some Critical Remarks," Kyklos, Wiley Blackwell, vol. 28(3), pages 526-544.
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