Delay as a Rationing Device

Abstract

Whenever goods and services are supplied at a price that lies below the market‐clearing level, excess demand occurs and some way has to be found of rationing the limited available supply amongst prospective customers. Problems of this kind may occur in any market in which price does not continuously adjust to the relative pressures of supply and demand. The phenomenon occurs in both private markets and in the government sector in both capitalist and non‐capitalist economies. A wide array of devices may take the place of price adjustment: adjustment of stocks or inventories; the emergence of black markets; discrimination amongst customers by sellers by reference to a wide variety of characteristics (such as whether they are regular customers or whether they are of a particular sex or colour or whatever); the application of some other rule such as first‐come‐first‐served and so forth. The object of this article is to focus on just one means of rationing limited supplies, namely that of using waiting time to reduce demand. To give a definite shape to discussion we impose the further limitation of confining ourselves to goods and services that are provided by public agencies of one kind or other, and to the provision of health care in particular.