Rationing by Waiting Lists: An Implication

Abstract

In a recent article, Cotton Lindsay and Bernard Feigenbaum (1984) present and test a model of rationing by waiting lists. Its novel feature is the recognition that being on some types of waiting list involves no opportunity cost and that consumers' surplus cannot be dissipated by waiters undertaking costly activities that will help secure the good or service in question. In this sense, time does not act as a price although it imposes costs. Although Lindsay's earlier version (1980) of this model has already been misinterpreted by some commentators,1 its heart is a waiting list that is equilibrated by attacking the assumption that the demand curve remains unchanged throughout the wait. Waiting time matters because the value of the good or service decays the longer it is delivered after order day. While not wishing to take issue with this insight, there are a number of points that need to be borne in mind when assessing the significance of the model, especially in relation to the authors' application to Britain's National Health Service (NHS).

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