Scandinavian Working Papers in Economics

Discussion Papers on Economics,
University of Southern Denmark, Department of Economics

No 8/2012: Rationing in the presence of baselines

Jens Leth Hougaard (), Juan D. Moreno-Ternero and Lars Peter Østerdal ()
Additional contact information
Jens Leth Hougaard: Institute of Food and Resource Economics, Postal: University of Copenhagen, Rolighedsvej 25, DK-1958 Frederiksberg C, Denmark
Juan D. Moreno-Ternero: Department of Economics, Postal: Universidad Pablo de Olavide, and CORE, Université catholique de Louvain
Lars Peter Østerdal: Department of Business and Economics, Postal: University of Southern Denmark, Campusvej 55, DK-5230 Odense M, Denmark

Abstract: We analyze a general model of rationing in which agents have baselines, in addition to claims against the (insufficient) endowment of the good to be allocated. Many real-life problems fit this general model (e.g., bankruptcy with prioritized claims, resource allocation in the public health care sector, water distribution in drought periods). We introduce (and characterize) a natural class of allocation methods for this model. Any method within the class is associated with a rule in the standard rationing model, and we show that if the latter obeys some focal properties, the former obeys them too.

Keywords: Rationing; baselines; claims; operators; solidarity

JEL-codes: D63

22 pages, March 12, 2012

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