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

  • Amedeo Fossati
  • Rosella Levaggi

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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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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  1. Amisano, Gianni & Tristani, Oreste, 2007. "Euro area inflation persistence in an estimated nonlinear DSGE model," Working Paper Series 0754, European Central Bank.
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  13. J.H. Dreze & E. Minelli & M. Tirelli, 2006. "Production and Financial Policies under Asymmetric Information," Working Papers ubs0608, University of Brescia, Department of Economics.
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  15. Sergio Vergalli, 2006. "Dynamics in Immigration Community," Working Papers ubs0613, University of Brescia, Department of Economics.
  16. 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.
  17. Rosella Levaggi, 2006. "Tax evasion and the cost of public sector activities," Working Papers ubs0616, University of Brescia, Department of Economics.
  18. 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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  20. Chiara Dalle Nogare & Matilde Vassalli, 2006. "A Pressure-Augmented Taylor Rule for Italy," Working Papers ubs0604, University of Brescia, Department of Economics.
  21. 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.
  22. 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.
  23. Giulio Palermo, 2006. "Il Potere Come Relazione Sociale: il Caso dell'Università Baronale Italiana," Working Papers ubs0612, University of Brescia, Department of Economics.
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