Optimal (Under-)Pricing and Allocation of Publicly Provided Goods

HTML  XML Download Download as PDF (Size: 564KB)  PP. 683-695  
DOI: 10.4236/tel.2017.74049    1,309 Downloads   1,938 Views  
Author(s)

ABSTRACT

This paper exploits the links between a private value distribution’s hazard rate, mean residual value, and eta functions in order to characterize posted-price rules for a public agency to allocate scarce units of an indivisible good under the utilitarian distributional objective of maximizing expected consumer surplus. Sufficient conditions on the monotonic and non-monotonic classes of the functions are established that identify either market assignment at the clearing price or lottery assignment with partial or complete under-pricing as the optimal allocation mechanism. The results are summarized across a wide range of parametric value distributions, and selected non-monotonic cases are evaluated numerically to determine the relative scarcity or abundance of the good necessary for market or non-market assignment to dominate.

Share and Cite:

Scrogin, D. (2017) Optimal (Under-)Pricing and Allocation of Publicly Provided Goods. Theoretical Economics Letters, 7, 683-695. doi: 10.4236/tel.2017.74049.

Copyright © 2024 by authors and Scientific Research Publishing Inc.

Creative Commons License

This work and the related PDF file are licensed under a Creative Commons Attribution 4.0 International License.