Optimal Public Rationing: Price response and cost effectiveness

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dc.contributor.author GRASSI, Simona
dc.contributor.author MA, Ching-to Albert
dc.date.accessioned 2009-08-04T07:06:50Z
dc.date.available 2009-08-04T07:06:50Z
dc.date.issued 2009
dc.identifier.issn 1830-7728
dc.identifier.uri http://hdl.handle.net/1814/12237
dc.description.abstract We study optimal public rationing of an indivisible good and private sector price response. Consumers differ in their wealth and cost of provisions. Due to a limited budget, some consumers must be rationed. Public rationing determines the characteristics of consumers who seek supply from the private sector, where a firm sets prices based on consumer cost information and in response to the rationing rule. We consider two inforrmation regimes. In the first, the public supplier rations consumers according to their wealth information. In equilibrium, the public supplier must ration both rich and poor consumers. Supplying all poor consumers would leave only rich consumers in the private market, and the firm would react by setting a high price. Rationing some poor consumers is optimal, and implements price reduction in the private market. In the second information regime, the public supplier rations consumes according to consumer wealth and cost information. In equilibrium, rationing is based on cost-effectiveness and consumers are allocated the good if and only if their costs are below a threshold. en
dc.language.iso en en
dc.relation.ispartofseries EUI MWP en
dc.relation.ispartofseries 2009/30 en
dc.subject Publicly provided private goods en
dc.subject Publicly provided goods: mixed markets en
dc.subject Government expendituresand welfare programs en
dc.subject Analysis of health care markets en
dc.subject Government policy en
dc.subject provision and effects of en
dc.title Optimal Public Rationing: Price response and cost effectiveness en
dc.type Working Paper en


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