Journal of Political Economy Vol. 132 No. 6 2024
Redistributive Allocation Mechanisms
Abstract
Many scarce public resources are allocated at below-market-clearing prices and sometimes for free. Such “nonmarket” mechanisms sacrifice some surplus, yet they can potentially improve equity. We develop a model of mechanism design with redistributive concerns. Agents are characterized by a privately observed willingness to pay for quality, a publicly observed label, and a social welfare weight. A market designer controls allocation and pricing of a set of objects of heterogeneous quality and maximizes the expectation of a welfare function. The designer does not directly observe individuals’ social welfare weights. We derive structural insights about the form of the optimal mechanism, leading to a framework for determining how and when to use nonmarket mechanisms.
- DOI
- 10.1086/728111
- Volume
- 132
- Issue
- 6
- Pages
- 1831-1875
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref