abstract: 'The paper develops a three-sector full-employment general equilibrium

  model for a small open developing economy with exogenous labour market

  imperfection and a non-traded sector providing healthcare services, the

  consumption of which generates positive externalities. Our main

  objective is :to show that the optimal consumption subsidy to

  healthcare, if solely judged from the standpoint of economic growth, is

  strictly positive (zero) when the production technology of the

  healthcare sector is of the variable (fixed) coefficient type. However,

  in the variable coefficient case, the optimal per capita expenditure on

  healthcare crucially hinges on the degree of labour market imperfection

  and the quality of services provided by the healthcare sector. The

  latter result can possibly be considered as a theoretical justification

  why the magnitude of per capita public spending on healthcare services

  is significantly lower in the developing countries compared to that in

  the developed nations. Besides, using the Sen''s (1974) index of social

  welfare that takes into consideration both the growth and income

  inequality aspects, we have proved that the optimal health subsidy is

  positive irrespective of the nature of production technology of the

  healthcare sector. Furthermore, most of these results are found to be

  valid even in the presence of Harris-Todaro type unemployment. Finally,

  the results lead to a few important policy implications in the context

  of the developing countries.'
affiliation: 'Chaudhuri, S (Corresponding Author), Univ Calcutta, Dept Econ, Kolkata,
  W Bengal, India.

  Chaudhuri, Sarbajit, Univ Calcutta, Dept Econ, Kolkata, W Bengal, India.

  Dwibedi, Jayanta Kumar, BKC Coll, Dept Econ, Kolkata, India.

  Biswas, Anindya, Spring Hill Coll, Div Business, Mobile, AL USA.'
author: Chaudhuri, Sarbajit and Dwibedi, Jayanta Kumar and Biswas, Anindya
author-email: 'sarbajitch19@gmail.com

  jayantadw@rediffmail.com

  abiswas@shc.edu'
author_list:
- family: Chaudhuri
  given: Sarbajit
- family: Dwibedi
  given: Jayanta Kumar
- family: Biswas
  given: Anindya
da: '2023-09-28'
doi: 10.1016/j.econmod.2017.04.011
eissn: 1873-6122
files: []
issn: 0264-9993
journal: ECONOMIC MODELLING
keywords: 'Consumption externality; Healthcare; Efficiency of labour; Health

  subsidy; Sen''s (1974) welfare index; Developing countries; General

  equilibrium'
keywords-plus: DEVELOPING-ECONOMY; WELFARE; GROWTH; GOODS
language: English
month: AUG
number-of-cited-references: '29'
orcid-numbers: Chaudhuri, Sarbajit/0000-0003-1471-0460
pages: 539-552
papis_id: 54fafd0a0064c0c3eb13d80f9127a174
ref: Chaudhuri2017subsidizinghealthcar
researcherid-numbers: 'CHAUDHURI, Sarbajit/AAE-6343-2019

  '
times-cited: '4'
title: Subsidizing healthcare in the presence of market distortions
type: Article
unique-id: WOS:000405052600046
usage-count-last-180-days: '0'
usage-count-since-2013: '10'
volume: '64'
web-of-science-categories: Economics
year: '2017'