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How To Avoid Awarding a Valuable Asset

Author

Listed:
  • Sam Bucovetsky

    (Department of Economics, York University)

  • Amihai Glazer

    (Department of Economics, University of California-Irvine)

Abstract

Many mechanisms (such as auctions) efficiently allocate a good to the firm which most highly values it. But sometimes the owner of the asset or good may wish to transfer it only if it is not too valuable to potential buyers. The allocation problem becomes especially difficult when the potential buyers have private information about the asset’s value. We describe several mechanisms which are efficient, or nearly so. We also show that rent seeking, and lobbying, rather than merely wasting resources, can lead to allocations which are close to efficient.

Suggested Citation

  • Sam Bucovetsky & Amihai Glazer, 2006. "How To Avoid Awarding a Valuable Asset," Working Papers 050619, University of California-Irvine, Department of Economics.
    • Handle: RePEc:irv:wpaper:050619
    as

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    File URL: https://www.economics.uci.edu/files/docs/workingpapers/2005-06/Glazer-19.pdf
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    References listed on IDEAS

    as
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    2. Lohmann, Susanne, 1998. "An Information Rationale for the Power of Special Interests," American Political Science Review, Cambridge University Press, vol. 92(4), pages 809-827, December.
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    4. Smith, Richard A., 1984. "Advocacy, Interpretation, and Influence in the U.S. Congress," American Political Science Review, Cambridge University Press, vol. 78(1), pages 44-63, March.
    5. Richard A. Posner, 1975. "The Social Costs of Monopoly and Regulation," Springer Books, in: Roger D. Congleton & Kai A. Konrad & Arye L. Hillman (ed.), 40 Years of Research on Rent Seeking 2, pages 45-65, Springer.
    6. Krueger, Anne O, 1974. "The Political Economy of the Rent-Seeking Society," American Economic Review, American Economic Association, vol. 64(3), pages 291-303, June.
    7. Lohmann, Susanne, 1995. "Information, Access, and Contributions: A Signaling Model of Lobbying," Public Choice, Springer, vol. 85(3-4), pages 267-284, December.
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    More about this item

    Keywords

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    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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