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Targeting Without Transfers

Author

Listed:
  • Filip Tokarski

Abstract

I study the welfare-maximizing allocation of heterogeneous goods when monetary transfers are prohibited. Agents have private cardinal values, and the designer chooses a non-monetary mechanism subject to incentive compatibility and aggregate supply constraints. I provide sufficient conditions under which the optimal mechanism coincides with a competitive equilibrium with equal incomes (CEEI). When these conditions fail, I characterize the optimum for two symmetric goods. I show that when narrow preference margins between goods predict greater need, the designer can sometimes benefit from distorting CEEI by offering a menu containing pure options and bundles.

Suggested Citation

  • Filip Tokarski, 2026. "Targeting Without Transfers," Papers 2602.00487, arXiv.org, revised Feb 2026.
    • Handle: RePEc:arx:papers:2602.00487
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    References listed on IDEAS

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