On the Benefits of Set-Asides
Article dans une revue: Set-aside programs that 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 (whose entry costs are already sunk) 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 Vickrey auction. This exclusion principle is generalized to dominant-strategy auctions that favor the incumbent in the sense that the incumbent would always get the good when valuing it most. By contrast, set-asides are not desirable if the incumbent’s payoff is included in the seller’s objective in the Vickrey auction, and more generally it is detrimental to exclude a bidder that is not favored.
Auteur(s)
Philippe Jehiel, Laurent Lamy
Revue
- Journal of the European Economic Association
Date de publication
- 2020
Mots-clés JEL
Pages
- 1655-1696
URL de la notice HAL
Version
- 1
Volume
- 18