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Oxford Economic Papers Advance Access originally published online on April 26, 2007
Oxford Economic Papers 2007 59(3):486-512; doi:10.1093/oep/gpm004
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Right arrow D30 - General
Right arrow D45 - Rationing; Licensing
Right arrow D63 - Equity, Justice, Inequality, and Other [...]
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Right arrow H42 - Publicly Provided Private Goods
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© Oxford University Press 2007 All rights reserved

Paying vs. waiting in the pursuit of specific egalitarianism

Jeremy Clark* and Bonggeun Kim{dagger}

*Department of Economics, University of Canterbury, Private Bag 4800, Christchurch, New Zealand, 8020; e-mail: jeremy.clark{at}canterbury.ac.nz
{dagger}Department of Economics and Finance, Hanyang University and Department of Economics, University of Waikato


  Abstract

We propose an allocation mechanism for publicly providing a private good such that the final allocation is independent of income yet increasing in strength of preference or need. The ‘pay or wait’ mechanism consists of offering the good for sale at two outlets. The ‘queuing’ outlet charges a low money price, but high waiting time per unit. The ‘pricing’ outlet charges a relatively high money price with rapid service. High wage individuals will opt for the pricing outlet, and low wage individuals the queuing outlet. If the policy maker stocks the outlets in proportion to the distribution of wage earners in the population, consumers of both wages will purchase the same amount on average, while those who value the good more relative to other goods will receive more of it. These outcomes are at risk if the good can be resold, but may be preserved if the policy maker can create transactions costs associated with resale.

Key Words: JEL classifications: D30 • D45 • H31 • I18


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