On the benefits of set-asides

Philippe Jehiel () and Laurent Lamy

CIRED Working Papers from HAL

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.

Keywords: set-asides; entry restrictions; auctions with endogenous entry; entry deterrence; asymmetric buyers; incumbents; government procurement; procurement competition policy (search for similar items in EconPapers)
Date: 2017-07
New Economics Papers: this item is included in nep-com, nep-des, nep-gth and nep-mic
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01557657v1
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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 (2016)
Working Paper: On the benefits of set-asides (2016)
Working Paper: On the benefits of set-asides (2016)
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