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dc.contributor.authorPai, Mallesh M.en_US
dc.contributor.authorVohra, Rakeshen_US
dc.date.accessioned2012-05-15en_US
dc.date.accessioned2012-07-12T12:33:39Z-
dc.date.available2012-07-12T12:33:39Z-
dc.date.issued2012en_US
dc.identifier.urihttp://hdl.handle.net/10419/59631-
dc.description.abstractGovernment procurement and allocation programs often use subsidies and setasides favoring small businesses and other target groups to address fairness concerns. These concerns are in addition to standard objectives such as efficiency and revenue. We study the design of the optimal mechanism for a seller concerned with efficiency, subject to a constraint to favor a target group. In our model, buyers' private values are determined by costly pre-auction investment. If the constraint is distributional, i.e. to guarantee that the target group wins sufficiently often, then the constrained efficient mechanism is a flat subsidy. This is consistent with findings in the empirical literature. In contrast, if the constraint is to ensure a certain investment level by the target group, the optimal mechanism is a type dependent subsidy. In this case a set aside may be better than a flat or percentage subsidy.en_US
dc.language.isoengen_US
dc.publisherNorthwestern Univ., Kellogg Graduate School of Management, Center for Mathematical Studies in Economics and Management Science Evanstonen_US
dc.relation.ispartofseriesDiscussion Paper, Center for Mathematical Studies in Economics and Management Science 1548en_US
dc.subject.jelD44en_US
dc.subject.jelH57en_US
dc.subject.ddc330en_US
dc.subject.keywordauctionsen_US
dc.subject.keywordsubsidiesen_US
dc.titleAuction design with fairness concerns: Subsidies vs. set-asidesen_US
dc.typeWorking Paperen_US
dc.identifier.ppn715699156en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
Appears in Collections:Discussion Papers, Kellogg School of Management, Northwestern University

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