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Market versus Non-Market Assignment of Initial Ownership

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  • Che, Yeon-Koo
  • Gale, Ian

Abstract

We study the initial assignment of ownership of a good. When the good is sold at the market-clearing price, wealthy agents may acquire it instead of poor agents who value it more highly, all else equal. Non-market assignment schemes such as random rationing may allocate the good more efficiently than the competitive market would --- if recipients of the good are allowed to resell. Schemes that favor the poor are even more desirable in that context. The ability to resell is critical to the results, but resale induces speculators to participate, so regulation of resale may be beneficial.

Suggested Citation

  • Che, Yeon-Koo & Gale, Ian, 2006. "Market versus Non-Market Assignment of Initial Ownership," MPRA Paper 6095, University Library of Munich, Germany, revised 30 May 2006.
    • Handle: RePEc:pra:mprapa:6095
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D0 - Microeconomics - - General
    • D2 - Microeconomics - - Production and Organizations
    • D3 - Microeconomics - - Distribution
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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