Publication Type

Journal Article

Version

acceptedVersion

Publication Date

5-2024

Abstract

We compare social welfare, consumer surplus and profits in two different institutional settings in which an item whose quantity is fixed and controlled (vehicle registration permit) is allocated to the buyers of a complementary good (car). In the first setting, which resembles the way in which vehicle registration permits are allocated in Singapore, the central planner runs a uniform price auction for permits in which the consumers who bid the highest receive the permits and pay the highest losing bid. Then each winning consumer purchases a car from a seller. In the alternative setting, the central planner first allocates the permits to sellers and then sellers offer to consumers bundles, each consisting of a car and a permit. For two different models of product differentiation, we find that social welfare is greater when permits are auctioned to consumers, but consumers and sellers generally prefer the alternative setting.

Keywords

Auctions, Driving permits, Posted prices

Discipline

Asian Studies | Behavioral Economics | Transportation

Research Areas

Applied Microeconomics

Publication

Journal of Economic Behavior and Organization

Volume

221

First Page

327

Last Page

349

ISSN

0167-2681

Identifier

10.1016/j.jebo.2024.03.020

Publisher

Elsevier

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.1016/j.jebo.2024.03.020

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