Market Versus Non-Market Assignment of Initial Ownership
AbstractWe study the assignment of initial ownership of a good when agents differ in their ability to pay. Selling the good at the market-clearing price favors the wealthy in the sense that they may acquire the good instead of poor buyers who value it more highly. Non-market assignment schemes, even simple random rationing, may yield a more efficient allocation than the competitive market would ¿ if recipients of the good are allowed to resell. Schemes that favor the poor are even more desirable in that context. The ability to resell the good is critical to the results, but allowing resale also invites speculation, which undermines its effectiveness. If the level of speculation is sufficiently high, restricting resale may be beneficial.
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Bibliographic InfoPaper provided by Columbia University, Department of Economics in its series Discussion Papers with number 0607-05.
Length: 41 pages
Date of creation: 2006
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Other versions of this item:
- Che, Yeon-Koo & Gale, Ian, 2006. "Market versus Non-Market Assignment of Initial Ownership," MPRA Paper 6095, University Library of Munich, Germany, revised 30 May 2006.
- D0 - Microeconomics - - General
- D2 - Microeconomics - - Production and Organizations
- D3 - Microeconomics - - Distribution
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
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