How to Ration the Public Provision of Private Goods

Jeff Frank

No 98/1, Royal Holloway, University of London: Discussion Papers in Economics from Department of Economics, Royal Holloway University of London

Abstract: This paper considers alternative allocation mechanisms in the public provision of private goods for the purpose of redistribution. The benchmark policy is to ration by low quality. Better off households choose higher quality private over subsidised public provision. It is suboptimal to ration by queues where individuals suffer deadweight losses while waiting. In contrast, waiting lists where households consume on the private market while waiting are optimal. Under certain circumstances, there are qualifying restrictions to remaining on the waiting list.

Pages: 16 pages
Date: 1997-07, Revised 1997-07
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