UNDERPRICING IN PUBLIC LOTTERIES: A CRITIQUE OF USER-PAY AND ALL-PAY TARIFFS

    Authors

    D. Scrogin

    Comments

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    Abbreviated Journal Title

    Econ. Inq.

    Keywords

    GOODS; Economics

    Abstract

    A body of literature spanning from medical ethics to public economics has amassed regarding the rationing of underpriced public resources. This study investigates the effects of price on entry, individual and aggregate expected consumer surplus, and tax revenues in user-pay and all-pay (AP) lotteries. Comparative statics indicate that expected surplus may increase (decrease) as price increases (decreases) if entry is sufficiently responsive though entry in AP lotteries is inelastic at all prices. Further, the lotteries are shown to be outcome equivalent under revenue equivalency. Selected results are evaluated numerically with simulations performed across a broad class of distributions describing individual private values. (JEL D45, D61, H42).

    Journal Title

    Economic Inquiry

    Volume

    47

    Issue/Number

    3

    Publication Date

    1-1-2009

    Document Type

    Article

    Language

    English

    First Page

    500

    Last Page

    511

    WOS Identifier

    WOS:000268168500006

    ISSN

    0095-2583

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