Jehiel, P;
Lamy, L;
(2020)
On the Benefits of Set-Asides.
Journal of the European Economic Association
, 18
(4)
pp. 1655-1696.
10.1093/jeea/jvz021.
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Abstract
Set-aside programs that consist in forbidding access to specific participants are commonly used in procurement auctions. We show that when the set of potential participants is composed of an incumbent (whose entry costs are already sunk) and of entrants who show up endogenously (in such a way that their expected rents are fixed by outside options), then it is always beneficial for revenues to exclude the incumbent in the Vickrey auction. This exclusion principle is generalized to dominant-strategy auctions that favor the incumbent in the sense that the incumbent would always get the good when valuing it most. By contrast, set-asides are not desirable if the incumbent’s payoff is included in the seller’s objective in the Vickrey auction, and more generally it is detrimental to exclude a bidder that is not favored.
| Type: | Article |
|---|---|
| Title: | On the Benefits of Set-Asides |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.1093/jeea/jvz021 |
| Publisher version: | https://doi.org/10.1093/jeea/jvz021 |
| Language: | English |
| Additional information: | This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions. |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices > UCL SLASH UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics |
| URI: | https://discovery-pp.ucl.ac.uk/id/eprint/10104609 |
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