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Delay is not the answer: waiting time in health care & income redistribution

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  • Amedeo Fossati
  • Rosella Levaggi

Abstract

In this paper, the use of delay as a tool to improve income redistribution is examined. We assume that people with the highest opportunity cost of waiting address their demand to the private market; if these, as we assume, are the ones at the higher end of the income distribution, they contribute through income tax, and pay for the private care they receive as well. Thus, public and private provision of health care, made mutually consistent within a utility-based approach by the presence of delay, may be used to modify income distribution. Our model modifies the results obtained by the current literature and shows that, when individual utilities are strictly quasi-concave and a cost-minimization framework is replaced by a Bergson-Samuelson welfare function maximisation, delay is no longer welfare improving. The reason is that, even when an optimum delay exists, the correspondent social maximum is a local maximum. The scope for using delay is then confined to environments where the Central Government’s power to tax is not sufficient to raise adequate resources or where, due to tax evasion or high tax distortions, second best tax instruments should be used.

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Bibliographic Info

Paper provided by University of Brescia, Department of Economics in its series Working Papers with number 0801.

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Date of creation: 2008
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Handle: RePEc:ubs:wpaper:0801

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References

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  1. Giulio Palermo, 2006. "Il Potere Come Relazione Sociale: il Caso dell'Università Baronale Italiana," Working Papers ubs0612, University of Brescia, Department of Economics.
  2. Rosella Levaggi, 2007. "Tax Evasion and the Cost of Public Sector Activities," Public Finance Review, , vol. 35(5), pages 572-585, September.
  3. John Geweke & Gianni Amisano, 2007. "Hierarchical Markov Normal Mixture Models with Applications to Financial Asset Returns," Working Papers 0705, University of Brescia, Department of Economics.
  4. Paolo Panteghini, 2009. "The capital structure of multinational companies under tax competition," International Tax and Public Finance, Springer, vol. 16(1), pages 59-81, February.
  5. Roberto Casarin & Monica Billio, 2006. "Stochastic Optimisation for Allocation Problems with Shortfall Risk Constraints," Working Papers ubs0618, University of Brescia, Department of Economics.
  6. Sergio Vergalli, 2007. "Entry and Exit Strategies in Migration Dynamics," Working Papers 0701, University of Brescia, Department of Economics.
  7. J.H. Dreze & E. Minelli & M. Tirelli, 2006. "Production and Financial Policies under Asymmetric Information," Working Papers ubs0608, University of Brescia, Department of Economics.
  8. Amisano, Gianni & Tristani, Oreste, 2010. "Euro area inflation persistence in an estimated nonlinear DSGE model," Journal of Economic Dynamics and Control, Elsevier, vol. 34(10), pages 1837-1858, October.
  9. Chiara Dalle Nogare & Matilde Vassalli, 2006. "A Pressure-Augmented Taylor Rule for Italy," Working Papers ubs0604, University of Brescia, Department of Economics.
  10. Menoncin, Francesco, 2008. "The role of longevity bonds in optimal portfolios," Insurance: Mathematics and Economics, Elsevier, vol. 42(1), pages 343-358, February.
  11. Moretto, Michele & Panteghini, Paolo M. & Scarpa, Carlo, 2008. "Profit sharing and investment by regulated utilities: A welfare analysis," Review of Financial Economics, Elsevier, vol. 17(4), pages 315-337, December.
  12. Forges, Françoise & Minelli, Enrico, 2009. "Afriat's theorem for general budget sets," Journal of Economic Theory, Elsevier, vol. 144(1), pages 135-145, January.
  13. Enrico Minelli & Salvatore Modica, 2006. "Credit Market Failures and Policy," Working Papers ubs0607, University of Brescia, Department of Economics.
  14. Federico Boffa & Carlo Scarpa, 2006. "Exporting Collusion Under Capacity Constraints: an Anti-Competitive Effect of Market Integration," Working Papers ubs0617, University of Brescia, Department of Economics.
  15. Aviad Heifetz & Enrico Minelli, 2006. "Aspiration Traps," Working Papers ubs0610, University of Brescia, Department of Economics.
  16. Rosella Levaggi & Francesco Menoncin, 2007. "A note on optimal tax evasion in the presence of merit goods," Working Papers 0702, University of Brescia, Department of Economics.
  17. Roberto Casarin & Jean-Michel Marin, 2007. "Online data processing: comparison of Bayesian regularized particle filters," Working Papers 0703, University of Brescia, Department of Economics.
  18. Alessandro Bucciol & Raffaele Miniaci, 2006. "Optimal Asset Allocation Based on Utility Maximization in the Presence of Market Frictions," Working Papers ubs0605, University of Brescia, Department of Economics.
  19. Laura Levaggi & Rosella Levaggi, 2007. "Regulation Strategies for Public Service Provision," Working Papers 0707, University of Brescia, Department of Economics.
  20. Sergio Vergalli, 2006. "Dynamics in Immigration Community," Working Papers ubs0613, University of Brescia, Department of Economics.
  21. Casarin, Roberto & Trecroci, Carmine, 2006. "Business Cycle and Stock Market Volatility: A Particle Filter Approach," Economics Papers from University Paris Dauphine 123456789/6830, Paris Dauphine University.
  22. Carmine Trecroci & Matilde Vassalli, 2006. "Monetary policy regime shifts: new evidence from time-varying interest rate rules," Working Papers 0602, University of Brescia, Department of Economics.
  23. Franco Spinelli & Carmine Trecroci, 2006. "Maastricht: New and Old Rules," Open Economies Review, Springer, vol. 17(4), pages 477-492, December.
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Citations

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Cited by:
  1. Alberto Bisin & John Geanakoplos & Piero Gottardi & Enrico Minelli & Herakles Polemarchakis, 2010. "Markets and contracts," Economics Working Papers ECO2010/29, European University Institute.
    • Alberto Bisin & John Geanakoplos & Piero Gottardi & Enrico Minelli & Heracles Polemarchakis, 2009. "Markets and Contracts," Working Papers 0915, University of Brescia, Department of Economics.
  2. Francesco Menoncin & Paolo Panteghini, 2009. "Retrospective Capital Gains Taxation in the Real World," CESifo Working Paper Series 2674, CESifo Group Munich.
  3. Alessandro Fedele & Paolo M. Panteghini & Sergio Vergalli, 2011. "Optimal Investment and Financial Strategies under Tax‐Rate Uncertainty," German Economic Review, Verein für Socialpolitik, vol. 12(4), pages 438-468, November.
  4. Alessandro Fedele & Raffaele Miniaci, 2009. "Do social enterprises finance their investments differently from for-profit firms? The case of social residential services in Italy," Working Papers 0911, University of Brescia, Department of Economics.
  5. Alessandra Del Boca & Michele Fratianni & Franco Spinelli & Carmine Trecroci, 2009. "The Phillips curve and the Italian lira, 1861-1998," Working Papers 0908, University of Brescia, Department of Economics.
  6. Martin Meier & Enrico Minelli & Herakles Polemarchakis, 2014. "Competitive markets with private information on both sides," Economic Theory, Springer, vol. 55(2), pages 257-280, February.
  7. Rosella Levaggi & Francesco Menoncin, 2009. "Decentralized provision of merit and impure public goods," Working Papers 0909, University of Brescia, Department of Economics.
  8. Monica Billio & Roberto Casarin, 2010. "Bayesian Estimation of Stochastic-Transition Markov-Switching Models for Business Cycle Analysis," Working Papers 1002, University of Brescia, Department of Economics.
  9. Alessandro Fedele & Francesco Liucci & Andrea Mantovani, 2009. "Credit availability in the crisis: the European investment bank group," Working Papers 0913, University of Brescia, Department of Economics.

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