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Title: Lottery or waiting-line auction?
Authors: Taylor, G.A.
Tsui, K.K.K.
Zhu, L. 
Keywords: Allocation mechanisms
Rent dissipation
Social surplus
Waiting-line auction
Issue Date: 2003
Citation: Taylor, G.A., Tsui, K.K.K., Zhu, L. (2003). Lottery or waiting-line auction?. Journal of Public Economics 87 (5-6) : 1313-1334. ScholarBank@NUS Repository.
Abstract: 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. © 2002 Elsevier Science B.V. All rights reserved.
Source Title: Journal of Public Economics
ISSN: 00472727
DOI: 10.1016/S0047-2727(01)00196-7
Appears in Collections:Staff Publications

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