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Underpricing In Public Lotteries: A Critique Of User‐Pay And All‐Pay Tariffs

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  • DAVID SCROGIN

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)

Suggested Citation

  • David Scrogin, 2009. "Underpricing In Public Lotteries: A Critique Of User‐Pay And All‐Pay Tariffs," Economic Inquiry, Western Economic Association International, vol. 47(3), pages 500-511, July.
    • Handle: RePEc:bla:ecinqu:v:47:y:2009:i:3:p:500-511
    DOI: 10.1111/j.1465-7295.2007.00084.x
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    References listed on IDEAS

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    Cited by:

    1. Adrienne Ohler & Hayley Chouinard & Jonathan Yoder, 2014. "Interest group incentives for post-lottery trade restrictions," Journal of Regulatory Economics, Springer, vol. 45(3), pages 281-304, June.
    2. Wei-chun Tseng & Shuhui Chiu, 2014. "An anti-bullying and keeping-friendship school enrollment lottery," Economics Bulletin, AccessEcon, vol. 34(1), pages 1-15.

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    More about this item

    JEL classification:

    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods

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