| Sumario: | This article outlines the efficiency criteria for determining the optimal size of facilities where use is rationed by means of wasted time. When consumers pay time rather than money, the demand curve--that is, the willingness- to-pay-money curve--is no longer the correct measure of the marginal benefit of an increased flow of users. In this note, the appropriate marginal benefits are identified and the criteria for the efficient size of the facility are derived for rationing by queue and by congestion. Finally, it is shown that welfare is greater in an optimally sized, underpriced, congested facility than in an optimally sized, underpriced, queued-for facility; and the conditions are explored under which queueing and congestion yield greater welfare than an optimally sized, underpriced facility rationed by random entry. There are inevitably resource costs to the admission or exclusion of customers for a limited facility, and these will differ among various rationing mechanisms. This note proceeds on the traditional assumption that all such costs are zero.
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