Set-Asides and Subsidies in Auctions

Susan Athey, Dominic Coey and Jonathan Levin

American Economic Journal: Microeconomics, 2013, vol. 5, issue 1, 1-27

Abstract: Set-asides and subsidies are used extensively in government procurement and resource sales. We analyze these policies in an empirical model of US Forest Service timber auctions. The model fits the data well both within the sample of unrestricted sales used for estimation, and when we predict (out-of-sample) outcomes for small business set-asides. Our estimates suggest that restricting entry substantially reduces efficiency and revenue, although it increases small business participation. An alternative policy of subsidizing small bidders would increase revenue and small bidder profit, with little efficiency cost. We explain these findings by connecting to the theory of optimal auction design. (JEL D44, H57, L73, Q23)

JEL-codes: D44 H57 L73 Q23 (search for similar items in EconPapers)
Date: 2013
Note: DOI: 10.1257/mic.5.1.1
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Citations: View citations in EconPapers (74)

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Related works:
Working Paper: Set-Asides and Subsidies in Auctions (2011)
Working Paper: Set-Asides and Subsidies in Auctions (2011)
Working Paper: Set-Asides and Subsidies in Auctions (2007)
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