Bidding for subsidies with one's patience

Gian Caspari

No 25-009, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: We study the problem of distributing subsidies in a market that includes both marginal individuals in need of assistance and infra-marginal individuals who would purchase the subsidized product without additional incentives. We propose the use of a wait time auction, where individuals bid the amount of time they are willing to wait in exchange for a specified subsidy amount. This design enables more direct targeting of marginal individuals, thereby enhancing the overall effectiveness of the subsidy program. Furthermore, screening is costless in equilibrium as no wait times are imposed, and practical robustness against deviations from equilibrium behavior can be ensured by implementing a maximum allowable bid.

Keywords: Subsidies; Market Design; Auctions (search for similar items in EconPapers)
JEL-codes: D47 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:313007

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