We propose a mechanism to implement the distributional goal of "specific egalitarianism", or that allocation of a good be independent of income, but increasing in relative strength of preference or need. Governments could offer the good at multiple "outlets" that charge different money and time prices. Individuals would self-select between outlets based on time opportunity cost. We show conditions under which differential pricing achieves specific egalitarianism more efficiently than uniform public provision funded from income tax, with or without optional private purchase. Differential pricing becomes more efficient than uniform provision as 1) the relative importance of the good rises, 2) the elasticity of substitution between goods falls, 3) variation in preferences increases and 4) income inequality rises or the proportion of the poor falls.
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Paper provided by University of Canterbury, Department of Economics in its series Working Papers in Economics with number
06/07.
Find related papers by JEL classification: D30 - Microeconomics - - Distribution - - - General D45 - Microeconomics - - Market Structure and Pricing - - - Rationing; Licensing H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
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