In recent auctions for paging licenses, the Federal Communications Commission has granted businesses owned by minorities and women substantial bidding credits. In this article, Professors Ayres and Cramton analyze a particular auction and argue that the affirmative action bidding preferences, by increasing competition among auction participants, increased the government's revenue by $45 million. Subsidizing the participation of new bidders can induce established bidders to bid more aggressively. The authors conclude that this revenue- enhancing effect does not provide a sufficient constitutional justification for affirmative action-but when such justification is independently present, affirmative actions can cost the government much less than is currently thought.
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Publisher Info
Paper provided by University of Maryland, Department of Economics - Peter Cramton in its series Papers of Peter Cramton with number
96slr.
Length: 55 pages Date of creation: 1996 Date of revision:
09 Jun 1998 Publication status: Published in Stanford Law Review, 48:4, April 1996, pages 761-815. Handle: RePEc:pcc:pccumd:96slr
Contact details of provider: Postal: Economics Department, University of Maryland, College Park, MD 20742-7211 Phone: (202) 318-0520 Fax: (202) 318-0520 Web page: http://www.cramton.umd.edu
For technical questions regarding this item, or to correct its listing, contact: (Peter Cramton).
Find related papers by JEL classification: D44 - Microeconomics - - Market Structure and Pricing - - - Auctions H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
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