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Deficit Reduction Through Diversity: How Affirmative Action at the FCC Increased Auction Competition

Ian Ayres () and Peter Cramton ()

Papers of Peter Cramton from University of Maryland, Department of Economics - Peter Cramton

Abstract: In recent auctions for paging licenses, the Federal Communications Commission has granted businesses owned by minorities and women substantial bidding credits. In this article, Professors Ayres and Cramton analyze a particular auction and argue that the affirmative action bidding preferences, by increasing competition among auction participants, increased the government's revenue by $45 million. Subsidizing the participation of new bidders can induce established bidders to bid more aggressively. The authors conclude that this revenue- enhancing effect does not provide a sufficient constitutional justification for affirmative action-but when such justification is independently present, affirmative actions can cost the government much less than is currently thought.

Keywords: Auctions; Affirmative Action (search for similar items in EconPapers)
JEL-codes: D44 H20 H53 L96 (search for similar items in EconPapers)
Pages: 55 pages
Date: 1996, Revised 1998-06-09
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Published in Stanford Law Review, 48:4, April 1996, pages 761-815.

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