On the benefits of set-asides

Abstract : Set-asides programs consist in forbidding access to specific participants, and they are commonly used in procurement auctions. We show that when the set of potential participants is composed of an incumbent (who bids for sure if allowed to) 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 second-price auction. This exclusion principle is generalized to auction formats that favor the incumbent in the sense that he would always gets the good when he values it most. By contrast, set-asides need not be desirable if the incumbent's payoff is included into the seller's objective or in environments with multiple incumbents. Various applications are discussed.
Type de document :
Pré-publication, Document de travail
PSE Working Papers n°2017-31. 2017
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Soumis le : jeudi 6 juillet 2017 - 14:05:06
Dernière modification le : jeudi 13 juillet 2017 - 12:53:46

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  • HAL Id : halshs-01557657, version 1

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Philippe Jehiel, Laurent Lamy. On the benefits of set-asides. PSE Working Papers n°2017-31. 2017. <halshs-01557657>

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