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AUCTION-LOTTERY HYBRID MECHANISMS: STRUCTURAL MODEL AND EMPIRICAL ANALYSIS
Abstract
This paper studies an auction‐lottery hybrid mechanism that is widely adopted in allocating new vehicle licenses in China. We characterize individuals' entry and bidding strategies in a symmetric Bayesian Nash equilibrium, structurally estimate individuals' value distribution from a dataset of Guangzhou program, and evaluate the performance of the mechanism. Based on the estimated distribution and counterfactual analysis, our study suggests that a hybrid mechanism preserves 83% efficiency and 52% revenue, while improves equity by 25 times comparing to a pure auction. We show that allowing auction losers to participate in the lottery can further enhance the performance.
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... Historically, only neural networks with training without a teacher have been used to solve CSP tasks. They are best suited for this purpose, since they do not require generating training examples [6][7][8][9]. This can easily be explained by a simple example: if we assume that the input of a neural network under control is a solution to the CSP problem, then a "good" training example for the network would have to be a valid CSP solution, hence we would already have denouements, which is obviously absurd. ...
... The GENET algorithm was introduced to the world by Wang i Tsang in 1991 [6] and was a logical extension of GDS networks. As in GDS, here neurons are divided into clusters. ...
... As a result of the first comparison, it was found that both algorithms met all the test tasks. Below are the results in figures [6]. ...
... This paper contributes to the growing literature on hybrid mechanisms that provides a rationale for resource allocation strategies that combine price and non-price features (Evans et al., 2009;Condorelli, 2013;Carpenter and Matthews, 2017;Huang and Wen, 2019;Arnosti and Shi, 2020). 1 Herein, we build on Che et al. (2013a) and Che et al. (2013b) to study the optimal initial allocation of natural resource extraction rights in the presence of credit frictions. We generalize their model to the case of correlated types, as given by agents' valuations and wealth, and compare the allocative efficiency of competitive bidding in a market where agents' bids are constrained by their budgets with that of a lottery followed by resale in a secondary market. ...
We study the optimal allocation of a resource in a second-best world in which parties may be liquidity-constrained due to credit frictions and capital market imperfections. In this setting, common to various natural resource industries, agents are unable to bid more than their budget regardless of their valuation. While auction markets are widely used mechanisms for allocating natural resource extraction rights and conservation contracts, we show that in these circumstances the competitive market -which allocates items based on rank order of bids- fails to achieve the first-best allocation. The market outcome is welfare-dominated by a hybrid mechanism consisting of random assignment followed by resale in a secondary market. Via the initial lottery, the hybrid-mechanism allocates the items with positive probability to high-valuation low-wealth individuals who would not have been able to afford them in a competitive market. High-valuation high-wealth agents, on the other hand, acquire the items in the secondary market if they do not receive them in the initial lottery. Therefore, equity in the allocation of access to the resource may be justified not only by distributional concerns but also by economic efficiency. We illustrate our model using data from buybacks of harvesting rights in the seafood industry.
... Liao & Holt (2013) examine the modification of Shanghai license auction in 2008 and indicate through experiments that this modification, which aims to curb revenue, will result in loss of efficiency. Huang & Wen (2019) present buyers' bidding strategies under the Guangzhou mechanism. To our knowledge, no studies have yet considered the social planner's overall objectives in designing a vehicle license allocation mechanism and examined the existing license allocation mechanisms in a unified framework. ...
In this paper, we propose an equality measure for allocation mechanisms with budget constraints to describe the difference in object obtaining opportunities among buyers with different budget ranks. We evaluate allocation mechanisms not only from the perspective of efficiency and revenue, but also with the criterion of equality. As an application of this new evaluation criterion -- the equality measure, we study the vehicle license allocation problem in China, introduce a class of hybrid auction-lottery mechanisms, and evaluate China's vehicle license allocation in a unified framework from the criteria of efficiency, equality, and revenue.
Queue-based rules for allocating scarce goods are widely utilized in booking systems due to their perceived efficiency. However, empirical investigations into the externalities and opportunity costs of queuing in multitasking scenarios are limited. This paper reports on two laboratory experiments that compare a queue-based rule with a lottery-based rule by quantifying their respective efficiency losses. Our findings indicate that while the queue-based rule demonstrates superior allocative efficiency, it incurs significant losses in productive efficiency attributed to opportunity costs of time. In contrast, the lottery-based rule exhibits improved overall efficiency with minimal time spent on the booking system. Additionally, under the queue-based rule, participants display bimodal behavior, either engaging fully or abstaining from the booking system, influenced by their time valuations. Further, while providing queue length information facilitates more efficient coordination, it also leads to more frequent task-switching behavior that negates any productive efficiency gain from improved coordination. This research underscores the crucial need to reevaluate allocation mechanisms in booking systems, taking into account their externalities.
This paper addresses the ownership rationing issues of gasoline vehicles (GV) and electric vehicles (EV) in a given time horizon. A state-owned vehicle manufacturer is assumed to be the producer of these vehicles. Two typical rationing schemes for the GV and EV ownership that have been implemented in some Chinese megacities, namely a simultaneous lottery scheme for both GV and EV and a hybrid scheme consisting of lottery for GV and first-come-first-served (FCFS) for EV, are investigated. Multi-period social cost minimization models are proposed for determining the optimal auto quota (i.e., the number of vehicles to be produced) and the optimal frequency of ownership allocation for each scheme in the given time horizon. In the proposed models, residents’ heterogeneity is considered in terms of their values of time (VOTs). The properties of the proposed models are analytically explored, and a comparison between the lottery mode and the FCFS mode is made. The results show that the lottery mode outperforms the FCFS mode in terms of the total social cost. The VOT threshold of the subsequent participants in auto rationing schemes tends to be higher than that of the preceding participants. The decision of EV subsidy should be cautiously made due to a tug of war between the resultant decreased pollutant emissions and increased traffic congestion. The implementation of the auto ownership rationing schemes can cause inequity issue in terms of the changes of travel costs of different-income residents. A Pareto-improvement strategy is presented to balance equity and efficiency of the rationing schemes.
Auto ownership rationing schemes, including lottery, auction and hybrid schemes, have been recognized as effective measures to mitigate urban traffic congestion. The implementation sequence of auction and lottery in the hybrid schemes has two possible scenarios: auction is implemented before lottery (i.e., A+L), and lottery is implemented before auction (i.e., L+A). This paper addresses the issues of income distribution, implementation sequence, and equity in the auto ownership rationing schemes. Expected social surplus maximization models are proposed for determining the optimal auto quota for each scheme and the optimal proportion allocated to the lottery and auction for the hybrid schemes. In the proposed models, a trade-off between positive externality (social contribution) and negative externality (traffic congestion) caused by auto industrial development is considered, together with effects of residents’ income distribution. Inequity issue incurred by the rationing schemes (who gains and who loses) is investigated, and Pareto-improvement strategy with self-financing constraint is presented to balance the equity and efficiency. The solution properties of the proposed models are analytically explored, and the solutions of different schemes are compared. The results show that (i) residents’ income distribution has no significant effects on the properties of the models; (ii) the optimal L+A hybrid scheme outperforms the optimal A+L hybrid scheme in terms of the expected social surplus; (iii) however, it is just reverse for the Pareto-improvement strategy that solves the inequity issue, i.e., the optimal A+L Pareto-improvement strategy is better than the optimal L+A Pareto-improvement strategy in terms of the expected social surplus.
The article analyzes the model of absolute state monopoly on gambling on the example of the idea of the Government of Ukraine to organize a lottery market by state-owned banks. The object of the study is the process of assessing the risks and economic benefits of involving state-owned banks to the organization and conduct of lotteries. The methodical instruments of the study were general scientific and special research methods (system-structural, formal-logical (dogmatic), economic, comparative, sociological, statistical). The study period is selected from 2014 to 2021. Based on the research conducted by the authors, the inefficiency and high riskiness of the combination of banks and lottery activities, as well as its economic disadvantage for the state, is proved by the authors. The main risk from the combination of these types of activities is that the bank can use the money attracted from the population not for their direct purpose, in particular: to use funds from the banking activity and the needs of the organization of lotteries or payouts, or to use funds of the prize money to goals other than payouts. In addition, the combination of these activities leads to an increase the number of crimes in the banking sector.
In this paper, we propose an equality measure for allocation mechanisms with budget constraints to describe the difference in object obtaining opportunities among buyers with different budget ranks. We evaluate allocation mechanisms not only from the perspective of efficiency and revenue, but also with the criterion of equality. As an application of this new evaluation criterion -- the equality measure, we study the vehicle license allocation problem in China, introduce a class of hybrid auction-lottery mechanisms, and evaluate China's vehicle license allocation in a unified framework from the criteria of efficiency, equality, and revenue.
This article presents a welfare analysis of the vehicle quota system of Shanghai, China. The empirical findings suggest that the quota system leads to both welfare loss as a result of reduction in vehicle transactions and welfare gain because of less externality of auto consumption. The net effect depends on the shadow price of the marginal externality, the assumption of vehicle lifetime, and market conditions such as consumers' intrinsic preference for vehicles. Compared to a progressive tax system, the quota system is less effective in vehicle control but more efficient in improving social welfare. © (2017) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association
Increased automobile ownership and use in China over the last two decades has increased energy consumption, worsened air pollution, and exacerbated congestion. However, the countrywide growth in car ownership conceals great variation among cities. For example, Shanghai and Beijing each had about 2 million motor vehicles in 2004, but by 2010, Beijing had 4.8 million motor vehicles whereas Shanghai had only 3.1 million. Among the factors contributing to this divergence is Shanghai’s vehicle control policy, which uses monthly license auctions to limit the number of new cars. The policy appears to be effective: in addition to dampening growth in car ownership, it generates annual revenues up to 5 billion CNY (800 million USD). But, despite these apparent successes, the degree to which the public accepts this policy is unknown.
valued because of an atavistic rivalry between the two countries in this respect. The Club Committee decided to have lots drawn for the tickets and to ask the winners to contribute DFL30 to the club funds for the purpose of buying a TV set for the club canteen. The six boys who had won the quiz, and who had already received personal presents, were not given priority in the distribution of the tickets; this decision was later reversed under heavy pressure amounting to, among other things, anonymous telephone threats to the club chairman. Many more illustrations could be given for the strong feelings of aversion that are often evoked by using lottery as an allocative mechanism. On the other hand, rational arguments in favour of lottery have been put forward. Elster (1989a) discusses three types of indeterminacy that might justify random choice between options. One is strict equioptimality, as in choosing between cans of Campbell's tomato soup. A second is equioptimality within the limit of what it pays to find out, that is, the case in which the cost of gathering more information would exceed the marginal utility of the superior option. The third is the incommensurability of options; one might say that, in this case, any investments into the choice procedure are fruitless a priori. The present analysis takes the contrast between aversion and argument as its point of departure. Its scope is allocative problems and particularly those situations in which some public authority distributes scarce indivisible goods among people, rather than problems of choice between goods from a private point of view, whether individual or institutional. In the context of allocation, the question about the feasibility of lottery may be analysed as follows: from a rational point of view, the efficiency of distributive mechanisms is at stake, as it is in other problems of rational choice. However, the interplay between the allocative authority, the target subject, and the general public or common interest introduces two further aspects of feasibility. One is justness, that is, the extent to which the mechanism is compatible with written and
Motivated by several interesting features of the highway mowing auction data from Texas Department of Transportation (TDoT), we propose a two-stage procurement auction model with endogenous entry and uncertain number of actual bidders. Our entry and bidding models pro-vide several interesting implications. For the …rst time, we show that even within an independent private value paradigm, as the number of potential bidders increases, bidders'equilibrium bid-ding behavior may become less aggressive because the "entry e¤ect"is always positive and may dominate the negative "competition e¤ect." We also show that it is possible that the relation-ship between the expected winning bid and the number of potential bidders is non-monotone decreasing as well. We then develop a structural model of entry and bidding controlling for unobserved auction heterogeneity and use the recently developed semiparametric Bayesian esti-mation method to analyze the data. The structural estimates are used to quantify the "entry e¤ect"and the "competition e¤ect"with regard to the individual bids and the procurement cost, as well as the savings for the government with regard to the procurement cost when the entry cost is reduced.
We propose an estimation method to bound bidders’ marginal valuations in discriminatory auctions using individual bid-level data and apply the method to data from the Turkish Treasury auction market. Using estimated bounds on marginal values, we compute an upper bound on the inefficiency of realized allocations as well as bounds on how much additional revenue could have been realized in a counterfactual uniform price or Vickrey auction. We conclude that switching from a discriminatory auction to a uniform price or Vickrey auction would not significantly increase revenue. Moreover, such a switch would increase bidder expected surplus by at most 0.02 percent.
The authors model entry incentives in auctions with risk-neutral bidders and characterize a symmetric equilibrium in which the number of entrants is stochastic. The presence of too many potential bidders raises coordination costs that detract from welfare. The authors show that the seller and society can benefit from policies that reduce market thickness (i.e., the relative abundance of buyers). Their analysis extends well-known revenue-equivalence and ranking theorems but also demonstrates that variations in the auction environment affect optimal policies (e.g., reservation prices) in ways not anticipated by models that ignore entry. Copyright 1994 by American Economic Association.
This paper presents a simple model of competitive procurement, in which potential bidders incur non-recoverable resource costs in preparing bids. The main findings are that equilibrium entry achieves a welfare optimum but that expected procurement cost need not decline with increases in the number of potential bidders.
Economists often favour market-based mechanisms over non-market based mechanisms to allocate scarce public resources on grounds of economic efficiency and revenue generation. When the usage of the resources in question generates type-dependent negative externalities, the welfare comparison can become ambiguous. Both types of allocation mechanisms are being implemented in China's major cities to distribute limited vehicle licences as a measure to combat worsening traffic congestion and air pollution. While Beijing employs non-transferable lotteries, Shanghai uses an auction system. This article empirically quantifies the welfare consequences of the two mechanisms by taking into account both allocation efficiency and automobile externalities post-allocation. Our analysis shows that different allocation mechanisms lead to dramatic differences in social welfare. Although Beijing's lottery system has a large advantage in reducing automobile externalities over auction, the advantage is offset by the significant allocative cost from misallocation. The lottery system in Beijing resulted in a social welfare loss of 30 billionYuan (nearly $5 billion) in 2012 alone. A uniform-price auction would have generated nearly 20 billion Yuan to Beijing municipal government, more than covering all its subsidies to the local public transit system. © The Author(s) 2017. Published by Oxford University Press on behalf of The Review of Economic Studies Limited.
Abundant data has led to new opportunities for empirical auctions research in recent years, with much of the newest work on auctions of multiple objects, including: (1) auctions of ranked objects (such as sponsored search ads), (2) auctions of identical objects (such as Treasury bonds), and (3) auctions of dissimilar objects (such as FCC spectrum licenses). This paper surveys recent developments in the empirical analysis of such auctions.
Auctions often involve the sale of many related goods: Treasury, spectrum, and electricity auctions are examples. In multi-unit
auctions, bids for marginal units may affect payments for inframarginal units, giving rise to “demand reduction” and furthermore
to incentives for shading bids differently across units. We establish that such differential bid shading results generically
in ex post inefficient allocations in the uniform-price and pay-as-bid auctions. We also show that, in general, the efficiency and revenue
rankings of the two formats are ambiguous. However, in settings with symmetric bidders, the pay-as-bid auction often outperforms.
In particular, with diminishing marginal utility, symmetric information and linearity, it yields greater expected revenues.
We explain the rankings through multi-unit effects, which have no counterparts in auctions with unit demands. We attribute
the new incentives separately to multi-unit (but constant) marginal utility and to diminishing marginal utility. We also provide
comparisons with the Vickrey auction.
This paper considers nonparametric identification of a two-stage entry and bidding game we call the Affiliated-Signal (AS) model. This model assumes that potential bidders have private values, observe signals of their values prior to entry, and then choose whether to undertake a costly entry process, but imposes only minimal structure on the relationship between signals and values. It thereby nests a wide range of entry processes, including in particular the Samuelson (1985) and Levin and Smith (1994) models as special cases. Working within the AS model, we map variation in factors affecting entry behavior (potential competition or entry costs) into identified bounds on model fundamentals. These bounds are constructive, collapse to point identification when available entry variation is continuous, and can readily be refined to produce the pointwise sharp identified set. We then extend our core results to accommodate nonseparable unobserved auction-level heterogeneity and potential endogeneity of entry shifters, thereby establishing a formal identification framework for structural analysis of auctions with selective entry.
Increased competition in the health care sector has led hospitals and other health care institutions to experiment with new access allocation policies that move away from traditional expert based allocation of care to price-based priority access (i.e., the option to pay more for faster care). To date, little is known about individuals' attitude toward price-based priority access and the evaluation process underlying this attitude. This paper addresses the role of individuals' evaluations of collective health outcomes as an important driver of their attitude toward (price-based) allocation policies in health care.
Recently, several auction models with entry have been proposed: in one model ( and ), bidders are assumed to draw their private values after they decide to enter. In another model ( and ), bidders are assumed to learn their values before their entry decisions are made. The entry cost in the latter model can be interpreted as bid preparation cost, while the entry cost in the former model consists of both costs from information acquisition and bid preparation. Moreover, these two models have different implications for important policies, e.g., the optimal reserve price. In this paper we provide a unified structural framework where the two models can be estimated and distinguished using the Bayesian method. We apply our method to analyze Michigan timber sale auctions.
In many procurement auctions, the bidders' unobserved costs depend both on a common shock and on idiosyncratic private information. Assuming a multiplicative structure, I derive sufficient conditions under which the model is identified and propose a non-parametric estimation procedure that results in uniformly consistent estimators of the cost components' distributions. The estimation procedure is applied to data from Michigan highway procurement auctions. Private information is estimated to account for 34% of the variation in bidders' costs. It is shown that accounting for unobserved auction heterogeneity has important implications for the evaluation of the distribution of rents, efficiency, and optimal auction design. Copyright 2011, Oxford University Press.
I discuss some recent progress in the empirical analysis of multi-unit auctions, through which a number of important commodities (Treasury bills and bonds, electricity, emission permits, monetary infusions by some central banks) are allocated.
This paper considers the structural analysis of first-price auctions with entry and binding reservation prices. The presence of entry decisions and binding reservation prices complicates the structural analysis. Building on the recent theoretical work on entry in auctions, this paper assumes that each potential bidder first decides whether or not to incur an entry cost and become an active bidder using a symmetric mixed strategy. Then each active bidder bids optimally following the increasing Nash–Bayesian equilibrium strategy. Using the observed bids and the number of actual bidders, we propose an MSM estimator to estimate the parameters in the distribution of private values and the distribution of the number of active bidders. Our approach can be used to validate the theoretical auction model, to test whether the reservation prices are binding, and to test the mixed-strategy of entry.
Auction theory is generalized by allowing the number of bidders to be stochastic. In a first-price sealed-bid auction with bidders having constant absolute risk aversion, the expected selling price is higher when the bidders do not know how many other bidders there are than when they do know this. Thus the seller should conceal the number of bidders if he can. Moreover, a bidder's ex ante expected utility is the same whether or not there is a policy of concealing the number of bidders: concealment therefore Pareto-dominates announcement. With risk-neutral bidders, the optimal auction is the same whether or not the bidders know who their competitors are.
Recently Laffont et al. (1995) have proposed an SNLLS estimator using winning bids only. Here, we derive a relationship between the means of observed bids and private values to propose an SNLLS estimator using all bids in first-price auctions.
This paper studies the efficiencies of the two most widely used non-price allocation mechanisms: lotteries and waiting-line auctions. As our analysis suggests, in addition to the fairness of the mechanism, the use of lotteries in lieu of waiting-line auctions can be also justified from an efficiency point of view. In particular, we show that the less dispersed consumers’ time valuations are, the more efficient is a lottery relative to a waiting-line auction. In addition, we identify four conditions under which a lottery dominates a waiting-line auction in expected social surplus preserving. Furthermore, the numerical simulations we conduct indicate that over a predominantly wide range of circumstances, a lottery is more socially efficient than a waiting-line auction as an allocative mechanism in the absence of a conventional price system.
This paper analyses, in a simple two-region model, the undertaking of noxious facilities when the central government has limited prerogatives. The central government decides whether to construct a noxious facility in one of the regions, and how to …nance it. We study this problem under both full and asymmetric information on the damage caused by the noxious facility in the host region. We particularly emphasize the role of the central government prerogatives on the optimal allocations. We …nally discuss our results with respect to the previous literature on NIMBY and argue that taking into account these limited prerogatives is indeed important.
In this imaginative and provocative book, Barbara Goodwin explores the question of how lottery systems can achieve egalitarian social justice in societies with seemingly ineradicable inequalities. She begins with the utopian fable of Aleatoria, a country not unlike our own in the not-too-distant-future, where most goods are distributed by lotteryâeven the right to have children. She then analyzes the philosophical arguments for and against lottery distribution and a comparison of "justice by lottery" with other contemporary theories of justice. Goodwin also applies her theory to practical problems in the real world which could beâor have beenâjustly resolved by the use of lotteries, such as military drafts, jury duty, and immigration eligibility. She demonstrates that in many areas, including that of political power, a regular and random reallocation of goods would be a fairer and more democratic method than the distributive systems found in liberal democracies today.
Motivated by efficiency and equity concerns, public resource managers have increasingly utilized hybrid allocation mechanisms that combine features of commonly used price (e.g., auction) and non-price (e.g., lottery) mechanisms. This study serves as an initial investigation of these hybrid mechanisms, exploring theoretically and experimentally how the opportunity to obtain a homogeneous good in a subsequent lottery affects Nash equilibrium bids in discriminative and uniform price auctions. The lottery imposes an opportunity cost to winning the auction, systematically reducing equilibrium auction bids. In contrast to the uniform price auction, equilibrium bids in the uniform price hybrid mechanism vary with bidder risk preferences. Experimental evidence suggests that the presence of the lottery and risk attitudes (elicited through a preceding experiment) impact auction bids in the directions predicted by theory. Finally, we find that theoretically and experimentally, the subsequent lottery does not compromise the efficiency of the auction component of the hybrid mechanisms.
This paper proposes a general approach and a computationally convenient estimation procedure for the structural analysis of auction data. Considering first-price sealed-bid auction models within the independent private value paradigm, we show that the underly- ing distribution of bidders' private values is identified from observed bids and the number of actual bidders without any parametric assumptions. Using the theory of minimax, we establish the best rate of uniform convergence at which the latent density of private values can be estimated nonparametrically from available data. We then propose a two-step kernel-based estimator that converges at the optimal rate.
I study a budget-constrained, private-valuation, sealed-bid sequential auction with two incompletely-informed, risk-neutral bidders in which the valuations and income may be non-monotonic functions of a bidder's type. Multiple equilibrium symmetric bidding functions may exist that differ in allocation, efficiency and revenue. The sequence of sale affects the competition for a good and therefore also affects revenue and the prices of each good in a systematic way that depends on the relationship among the valuations and incomes of bidders. The sequence of sale may affect prices and revenue even when the number of bidders is large relative to the number of goods. If a particular good, say [alpha], is allocated to a strong bidder independent of the sequence of sale, then auction revenue and the price of good [alpha] are higher when good [alpha] is sold first.
We develop and implement a collocation method to solve for an equilibrium in the dynamic legislative bargaining game of Duggan and Kalandrakis (2008). We formulate the collocation equations in a quasi-discrete version of the model, and we show that the collocation equations are locally Lipchitz continuous and directionally differentiable. In numerical experiments, we successfully implement a globally convergent variant of Broyden's method on a preconditioned version of the collocation equations, and the method economizes on computation cost by more than 50% compared to the value iteration method. We rely on a continuity property of the equilibrium set to obtain increasingly precise approximations of solutions to the continuum model. We showcase these techniques with an illustration of the dynamic core convergence theorem of Duggan and Kalandrakis (2008) in a nine-player, two-dimensional model with negative quadratic preferences.
We experimentally investigate the sensitivity of bidders demanding multiple units of a homogeneous commodity to the demand reduction incentives inherent in uniform price auctions. There is substantial demand reduction in both sealed bid and ascending price clock auctions with feedback regarding rivals' drop-out prices. Although both auctions have the same normal form representation, bidding is much closer to equilibrium in the ascending price auctions. We explore the behavioral process underlying these differences along with dynamic Vickrey auctions designed to eliminate the inefficiencies resulting from demand reduction in the uniform price auctions.
The distribution of personal income is approximated by a two-parameter gamma density function (Pearson Type III). The two parameters may be considered as indicators of scale and of inequality, respectively. Maximum likelihood estimates of the parameters are derived from a random sample using graphical techniques, and a likelihood ratio test for the hypothesis that the inequality parameter is the same for different distributions is presented. The derivation of both the estimates and the test statistic requires computing the arithmetic and geometric means from the sample. An empirical application, including a comparison of the gamma and lognormal distributions to demonstrate the better fit of the gamma, is made to personal income data in the United States for the years 1960 to 1969. Using the gamma density, inequality is shown to decrease when unemployment or inflation decreases, or when the real national product increases.
Corruption in the public sector erodes tax compliance and leads to higher tax evasion. Moreover, corrupt public officials abuse their public power to extort bribes from the private agents. In both types of interaction with the public sector, the private agents are bound to face uncertainty with respect to their disposable incomes. To analyse effects of this uncertainty, a stochastic dynamic growth model with the public sector is examined. It is shown that deterministic excessive red tape and corruption deteriorate the growth potential through income redistribution and public sector inefficiencies. Most importantly, it is demonstrated that the increase in corruption via higher uncertainty exerts adverse effects on capital accumulation, thus leading to lower growth rates.
Reforming Immigration: Helping Meet America's Need for a Skilled Workforce
- P. Gross
- B. MacLaury
Better Lucky Than Rich? Welfare Analysis of Automobile License Allocations in Beijing and Shanghai Review of Economic Studies
- S Li
Holt The Pursuit of Revenue Reduction: An Experimental Analysis of the Shanghai License Plate Auction
- E Z C A Liao
A Model of Income Distribution
- Champemowne
The Pursuit of Revenue Reduction: An Experimental Analysis of the Shanghai License Plate Auction ” working paper
- E Z Liao
- . A Holt