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Rationing by Waiting, Opportunity Costs of Waiting and Bribery

Author

Listed:
  • Praveen Kulshreshtha

    (Economics Area, Indian Institute of Management, Vastrapur, Ahmedabad 38015, India)

Abstract

This paper analyzes the relationship between opportunity costs of waiting and bribery in rationing by waiting situations. Assuming that a uniform waiting time clears the market for any given bribe and the bureaucrat chooses a bribe to maximize profit, the market equilibrium is characterized in terms of individual valuations of the good and opportunity costs of waiting. If individual valuations take discrete values and opportunity costs of waiting are uniformly distributed then in an equilibrium individuals with low costs of waiting choose to wait while those with high opportunity costs pay the bribe. However if valuations and costs of waiting are uniformly distributed, bribery is pervasive in equilibrium (i.e. all units are sold via bribery). Moreover, an increase in bribery does not necessarily imply an improvement in allocational efficiency.

Suggested Citation

  • Praveen Kulshreshtha, 2003. "Rationing by Waiting, Opportunity Costs of Waiting and Bribery," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 38(1), pages 59-75, January.
  • Handle: RePEc:dse:indecr:v:38:y:2003:i:1:p:59-75
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    Citations

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    Cited by:

    1. Amitrajeet A. Batabyal & Seung Jick Yoo, 2007. "Corruption, Bribery, and Wait Times in the Public Allocation of Goods in Developing Countries," Review of Development Economics, Wiley Blackwell, vol. 11(3), pages 507-517, August.
    2. Amitrajeet Batabyal, 2005. "On the allocation of commodities by queuing and the prevention of violence," Economics Bulletin, AccessEcon, vol. 15(14), pages 1-7.
    3. repec:ebl:ecbull:v:15:y:2005:i:14:p:1-7 is not listed on IDEAS

    More about this item

    Keywords

    Allocational Efficiency; Bribery; Exclusion; Rationing by waiting; Uniform Distribution;

    JEL classification:

    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing
    • D60 - Microeconomics - - Welfare Economics - - - General
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General

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