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A Model of Access in the Absence of Markets

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  • Holzer Jorge
  • McConnell Kenneth

    (Department of Agricultural and Resource Economics, University of Maryland, 2200 Symons Hall, College Park, MD, 20742, USA)

Abstract

Economists have long known that properly designed markets allocate resources efficiently. However, in many circumstances markets are unfeasible. In this paper, we construct a general model of access which allows us to value different assignments when resources are allocated in the absence of markets. We demonstrate that marginal value schedules are far less useful in allocating access when property rights are unattainable. The criteria for optimal allocation combine information on both the marginal value schedules and the assignments determining the probabilities of access to the resource. Our approach allows us to rank rationing policies in a wide range of real-world, second-best settings.

Suggested Citation

  • Holzer Jorge & McConnell Kenneth, 2016. "A Model of Access in the Absence of Markets," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 16(1), pages 367-388, January.
    • Handle: RePEc:bpj:bejtec:v:16:y:2016:i:1:p:367-388:n:13
    DOI: 10.1515/bejte-2015-0026
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    References listed on IDEAS

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    4. Yoon, Kiho, 2011. "Optimal mechanism design when both allocative inefficiency and expenditure inefficiency matter," Journal of Mathematical Economics, Elsevier, vol. 47(6), pages 670-676.
    5. Condorelli, Daniele, 2012. "What money canʼt buy: Efficient mechanism design with costly signals," Games and Economic Behavior, Elsevier, vol. 75(2), pages 613-624.
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