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Differential Time and Money Pricing as a Mechanism for In-kind Redistribution

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Abstract

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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  • Jeremy Clark & Bonggeun Kim, 2006. "Differential Time and Money Pricing as a Mechanism for In-kind Redistribution," Working Papers in Economics 06/07, University of Canterbury, Department of Economics and Finance.
    • Handle: RePEc:cbt:econwp:06/07
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    Cited by:

    1. Jeremy Clark & Bonggeun Kim, 2007. "Paying vs. waiting in the pursuit of specific egalitarianism," Oxford Economic Papers, Oxford University Press, vol. 59(3), pages 486-512, July.

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    More about this item

    Keywords

    In-kind provision; specific egalitarianism; differential pricing;
    All these keywords.

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - 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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