On the benefits of set-asides

Laurent Lamy and Philippe Jehiel ()

No 11564, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Set-asides programs which 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 (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 to exclude the incumbent in the second-price auction. This exclusion principle carries over to other auction formats that favor the incumbent and also to some environments with multiple incumbents. Whether it could be beneficial to exclude some kinds of entrants is also addressed. Various applications are discussed.

Keywords: Set-asides; Auctions with endogenous entry; Entry deterrence; Asymmetric buyers; Incumbents; Government procurement (search for similar items in EconPapers)
JEL-codes: D44 H57 L10 (search for similar items in EconPapers)
Date: 2016-10
New Economics Papers: this item is included in nep-mic
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Related works:
Journal Article: On the Benefits of Set-Asides (2020)
Working Paper: On the Benefits of Set-Asides (2020)
Working Paper: On the Benefits of Set-Asides (2020)
Working Paper: On the benefits of set-asides (2017)
Working Paper: On the benefits of set-asides (2017)
Working Paper: On the benefits of set-asides (2017)
Working Paper: On the benefits of set-asides (2017)
Working Paper: On the benefits of set-asides (2016)
Working Paper: On the benefits of set-asides (2016)
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