How to allocate Research (and other) Subsidies
AbstractA budget-constrained buyer wants to purchase items from a short-listed set. Items are differentiated by observable quality and sellers have private reserve prices for their items. The buyerâ€™s problem is to select a subset of maximal quality. Money does not enter the buyerâ€™s objective function, but only his constraints. Sellers quote prices strategically, inducing a knapsack game. We derive the Bayesian optimal mechanism for the buyerâ€™s problem. We ?nd that simultaneous take-it-or-leave-it offers are optimal. Hence, somewhat surprisingly, ex-postcompetition is not required to implement optimality. Finally, we discuss the problem in a detail free setting.
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Bibliographic InfoPaper provided by Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich in its series Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems with number 351.
Date of creation: Mar 2011
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Mechanism Design; Subsidies; Budget; Procurement; Knapsack Problem;
Other versions of this item:
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- D45 - Microeconomics - - Market Structure and Pricing - - - Rationing; Licensing
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
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- Tilman Borgers & Peter Norman, 2005.
"A Note on Budget Balance under Interim Participation Constraints: The Case of Independent Types,"
784828000000000147, UCLA Department of Economics.
- Tilman Börgers & Peter Norman, 2009. "A note on budget balance under interim participation constraints: the case of independent types," Economic Theory, Springer, vol. 39(3), pages 477-489, June.
- Borgers, Tilman & Norman, Peter, 2005. "A Note on Budget Balance under Interim Participation Constraints: The Case of Independent Types," Microeconomics.ca working papers norman-05-02-08-08-39-42, Vancouver School of Economics, revised 23 Jun 2005.
- Tilman Börgers & Peter Norman, 2005. "A Note on Budget Balance under Interim Participation Constraints: The Case of Independet Types," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2005_14, Max Planck Institute for Research on Collective Goods.
- Tilman Börgers & Peter Norman, 2005. "A Note on Budget Balance under Interim Participation Constraints: The Case of Independent Types," Levine's Bibliography 784828000000000171, UCLA Department of Economics.
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