MD80 Captain discoverd 500 FT altimeter error in his altimeter passing FL180. Flight remained below RVSM airspace and continued to destination with Dispatch's concurance.

Narrative

During our initial climb out; passing through FL180 while checking altimeters; I noticed that my (Captain's) altimeter was lagging behind the First Officer's altimeter by approximately 500 FT. We called Center and advised them that we were unable RVSM altitudes and leveled off at FL280. The Captain's altimeter was still 500 FT below both the First Officer's and the standby altimeters and when we leveled off; Center concurred that we were level at FL280. During this time; I had the First Officer call Dispatch to ensure we had enough fuel to continue to our destination at FL280. With the weather clear; they revised our flight plan to read ALT NONE and we were about 3000 LBS over our reserve and alternate fuel requirement. I also felt that the aircraft would be taken out of service at our destination and asked dispatch if we should just return to our departure airport. Dispatch told us to continue and maintenance there would hopefully be able to fix the problem. Once on the ground altimeters were still 500 FT off the maintenance could not fix the problem. The aircraft was taken out of service and the crew remained overnight. My First Officer did a very nice job during the event; coordinating with dispatch and helping check our manual for proper procedural actions.