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Market versus Non-Market Assignment of Initial Ownership

  • Che, Yeon-Koo
  • Gale, Ian

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.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 6095.

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Date of creation: 10 May 2006
Date of revision: 30 May 2006
Handle: RePEc:pra:mprapa:6095
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  13. Tobin, James, 1970. "On Limiting the Domain of Inequality," Journal of Law and Economics, University of Chicago Press, vol. 13(2), pages 263-77, October.
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