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Set-Asides and Subsidies in Auctions

Author

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  • Jonathan Levin

    (Stanford University)

  • Susan Athey

    (Harvard University)

Abstract

Set-asides and subsidies are used extensively in government procurement and natural resource sales. Economic theory is ambiguous on how such policies affect both auction participation and auction prices. We study the use of these policies, targeted at small businesses, in the context of U.S. Forest Service timber auctions. Empirically, the decline in large bidders at set-aside auctions is matched by an increase in smaller bidders, with only slight revenue effects. We then compare the existing set-aside program to a proposed program of small-bidder subsidies. We find that such a change.

Suggested Citation

  • Jonathan Levin & Susan Athey, 2007. "Set-Asides and Subsidies in Auctions," 2007 Meeting Papers 571, Society for Economic Dynamics.
    • Handle: RePEc:red:sed007:571
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • L53 - Industrial Organization - - Regulation and Industrial Policy - - - Enterprise Policy

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