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Publications
  • June 2024
  • Article
  • Journal of Political Economy

Redistributive Allocation Mechanisms

By: Mohammad Akbarpour, Piotr Dworczak and Scott Duke Kominers
  • Format:Print
  • | Pages:45
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Abstract

Many scarce public resources are allocated at below-market-clearing prices, and sometimes for free. Such "non-market" 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 non-market mechanisms. The key determinant is the strength of the statistical correlation of the unobserved social welfare weights with the label and the willingness to pay that the designer can, respectively, directly observe or elicit through the mechanism.

Keywords

Equality and Inequality; Welfare; Mathematical Methods; Market Design; Cost vs Benefits

Citation

Akbarpour, Mohammad, Piotr Dworczak, and Scott Duke Kominers. "Redistributive Allocation Mechanisms." Journal of Political Economy 132, no. 6 (June 2024): 1831–1875. (Authors' names are in certified random order.)
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About The Author

Scott Duke Kominers

Entrepreneurial Management
→More Publications

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More from the Authors
  • Collusion in Brokered Markets By: John William Hatfield, Scott Duke Kominers and Richard Lowery
  • Harvard Students Should Ignore Calls to Boycott Israel Trek By: Jesse M. Fried, Paul A. Gompers, Scott Kominers and Mark C. Poznansky
  • O2X: Optimizing to the X By: Scott Duke Kominers, Thomas Jennings and Maisie Wiltshire-Gordon
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