Increased capacity may exacerbate rationing problems: with applications to medical care.
Denial of service is more costly or difficult when the capacity to serve an individual exists (or when serving him does not reduce the service provided others) than when limited capacity makes it effectively impossible to serve some persons. In the presence of such differential costs of limiting service, a reduction in capacity (even when free) may increase social welfare. A review of data on medical care suggests that reductions in capacity may be necessary to limit the provision of care.
Glazer
A
A
Department of Economics, University of California, Irvine 92612, USA. aglazer@uci.edu
Rothenberg
L S
LS
D015276:Health Care Rationing / Q000191:economics*; D006301:Health Services Needs and Demand / Q000191:economics; D006302:Health Services Research; D006801:Humans; D015233:Models, Statistical; D016079:Refusal to Treat; D014481:United States