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Rationing a "Free" Good: A Classroom Experiment

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  • Lori Alden

Abstract

Abstract: The author describes a classroom experiment that illustrates the welfare effects of allocating a good on a first-come, first-served basis. In the first round, each student must decide how long to wait in an imaginary line for candy, without knowing how much will be distributed or how long others are willing to wait. In making this decision, a student must balance a desire to win candy with a desire to spend as little time as possible in line. The supply and demand curves for the candy are then revealed and the consumer surplus and time spent waiting are measured. In subsequent rounds, students are allowed to change their wait times in light of this new information. Their wait times eventually conform to the textbook model of nonprice allocation with perfect information.

Suggested Citation

  • Lori Alden, 2006. "Rationing a "Free" Good: A Classroom Experiment," The Journal of Economic Education, Taylor & Francis Journals, vol. 37(2), pages 178-186, April.
  • Handle: RePEc:taf:jeduce:v:37:y:2006:i:2:p:178-186 DOI: 10.3200/JECE.37.2.178-186
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    References listed on IDEAS

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    1. Mieszkowski, Peter & Zodrow, George R, 1989. "Taxation and the Tiebout Model: The Differential Effects of Head Taxes, Taxes on Land Rents, and Property Taxes," Journal of Economic Literature, American Economic Association, pages 1098-1146.
    2. Edward Clarke, 1971. "Multipart pricing of public goods," Public Choice, Springer, vol. 11(1), pages 17-33, September.
    3. John D. Donahue, 1997. "Tiebout? Or Not Tiebout? The Market Metaphor and America's Devolution Debate," Journal of Economic Perspectives, American Economic Association, vol. 11(4), pages 73-81, Fall.
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    7. Theodore Groves & John Ledyard, 1977. "Some limitations of demand revelaing processes," Public Choice, Springer, vol. 29(2), pages 107-124, March.
    8. repec:cup:apsrev:v:83:y:1989:i:03:p:711-728_08 is not listed on IDEAS
    9. Rubinfeld, Daniel L & Shapiro, Perry & Roberts, Judith, 1987. "Tiebout Bias and the Demand for Local Public Schooling," The Review of Economics and Statistics, MIT Press, vol. 69(3), pages 426-437, August.
    10. Kollman, Ken & Miller, John H & Page, Scott E, 1997. "Political Institutions and Sorting in a Tiebout Model," American Economic Review, American Economic Association, pages 977-992.
    11. Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, vol. 41(4), pages 617-631, July.
    12. Brueckner, Jan K., 2000. "A Tiebout/tax-competition model," Journal of Public Economics, Elsevier, pages 285-306.
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