Of Merit Goods and Inequality
Of Merit Goods and Inequality
This chapter examines merit goods whose allocation through the prevailing distribution of wealth is highly undesirable to a significant number of people. Many in our society believe that certain goods (and bads) should be allocated in ways that do not depend primarily on the prevailing distribution of wealth. To put it in an economic perspective, the allocation of merit goods through the prevailing wealth distribution creates significant external moral costs. This chapter considers ways of reducing the external moral costs that result from allocations of wealth distribution-dependent merit goods, with particular emphasis on modified command and markets. It discusses three possibilities for using modified market structures: a system similar to rationing as used in World War II; the use of taxes or subsidies; and a market in which the medium of exchange is not money but some other widely held good, such as time.
Keywords: merit goods, wealth distribution, moral costs, time, modified command and markets, rationing, taxes, subsidies, allocation of goods
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