Cash versus Kind, Self-Selection, and Efficient Transfers

Cash versus Kind, Self-Selection, and Efficient Transfers

This paper investigates second-best (transfers in kind) and third-best (subsidies and taxes) Pareto optima in a simple model where government lacks full information about consumer types (who is able, who is infirm). These Pareto optima rely on self-selection. We show that every third-best optimum ot...

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Veröffentlicht in:The American economic review 1988-09, Vol.78 (4), p.691-700
Hauptverfasser: Blackorby, Charles, Donaldson, David
Format: Artikel
Sprache:eng
Schlagworte:
Cash
Econometrics
Economic models
Economic policy
Economic theory
Economics
Efficiency
Health care economics
Normal goods
Pareto efficiency
Pareto optimum
Patient care
Rationing
Utility functions
Welfare economics
Yams
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Zusammenfassung:This paper investigates second-best (transfers in kind) and third-best (subsidies and taxes) Pareto optima in a simple model where government lacks full information about consumer types (who is able, who is infirm). These Pareto optima rely on self-selection. We show that every third-best optimum other than the equal-income Walrasian equilibrium is Pareto-dominated by a second-best optimum and that standard "willingness-to-pay" criteria are inappropriate in this environment.
ISSN:0002-8282
1944-7981