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Allocation of Goods by Lottery

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  • Boyce, John R

Abstract

Many authors have argued that lotteries are used to allocate resources because of the fairness of the mechanism. However, a number of historical examples suggest otherwise. Participation fees are almost always charged and they are often discriminatory. In addition, goods (or bads) allocated by lotteries are usually not transferable. Both lottery participation fees and restrictions on transferability reduce rent-seeking from speculators. Each feature increases the rents to the primary user groups relative to the rents attainable from alternative mechanisms such as auctions, queues, or merit allocations. Copyright 1994 by Oxford University Press.

Suggested Citation

  • Boyce, John R, 1994. "Allocation of Goods by Lottery," Economic Inquiry, Western Economic Association International, vol. 32(3), pages 457-476, July.
    • Handle: RePEc:oup:ecinqu:v:32:y:1994:i:3:p:457-76
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    Cited by:

    1. Singfat Chu, 2014. "Mitigating supply and price volatilities in Singapore’s vehicle quota system," Transportation, Springer, vol. 41(5), pages 1119-1134, September.
    2. Evans, Mary F. & Vossler, Christian A. & Flores, Nicholas E., 2009. "Hybrid allocation mechanisms for publicly provided goods," Journal of Public Economics, Elsevier, vol. 93(1-2), pages 311-325, February.
    3. Scrogin, David, 2005. "Lottery-rationed public access under alternative tariff arrangements: changes in quality, quantity, and expected utility," Journal of Environmental Economics and Management, Elsevier, vol. 50(1), pages 189-211, July.
    4. Hu, Mantian & Xiao, Junji & Zheng, Bingyong, 2022. "The selection effect of quota rationing mechanisms on sales distribution: The convergence of auction and lottery," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 803-819.
    5. Adrienne Ohler & Hayley Chouinard & Jonathan Yoder, 2014. "Interest group incentives for post-lottery trade restrictions," Journal of Regulatory Economics, Springer, vol. 45(3), pages 281-304, June.
    6. Chu, Singfat, 2012. "Allocation flexibility and price efficiency within Singapore’s Vehicle Quota System," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(10), pages 1541-1550.
    7. David Scrogin, 2009. "Underpricing In Public Lotteries: A Critique Of User‐Pay And All‐Pay Tariffs," Economic Inquiry, Western Economic Association International, vol. 47(3), pages 500-511, July.
    8. Matt Van Essen & John Wooders, 2023. "Dual auctions for assigning winners and compensating losers," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 76(4), pages 1069-1114, November.
    9. Kaplan, Todd R. & Zamir, Shmuel, 2015. "Advances in Auctions," Handbook of Game Theory with Economic Applications,, Elsevier.
    10. Youming Liu & Shanjun Li & Caixia Shen, 2020. "The Dynamic Efficiency in Resource Allocation: Evidence from Vehicle License Lotteries in Beijing," NBER Working Papers 26904, National Bureau of Economic Research, Inc.
    11. Ohler, Adrienne & Chouinard, Hayley H. & Yoder, Jonathan K., 2007. "Welfare Trade-offs between Transferable and Non-Transferable Lotteries," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon 7363, Western Agricultural Economics Association.
    12. Scrogin, David & Berrens, Robert P. & Bohara, Alok K., 2000. "Policy Changes And The Demand For Lottery-Rationed Big Game Hunting Licenses," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 25(2), pages 1-19, December.
    13. Jorge Holzer & Kenneth McConnell, 2014. "Harvest Allocation without Property Rights," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 1(1), pages 209-232.
    14. Soham R. Phade & Venkat Anantharam, 2018. "Optimal Resource Allocation over Networks via Lottery-Based Mechanisms," Papers 1812.00501, arXiv.org.
    15. Gil Epstein & Shmuel Nitzan, 2006. "The Politics of Randomness," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 27(2), pages 423-433, October.
    16. David O. Scrogin & Robert P. Berrens, 2003. "Rationed Access and Welfare: The Case of Public Resource Lotteries," Land Economics, University of Wisconsin Press, vol. 79(2), pages 137-148.
    17. Taylor, Grant A. & Tsui, Kevin K. K. & Zhu, Lijing, 2003. "Lottery or waiting-line auction?," Journal of Public Economics, Elsevier, vol. 87(5-6), pages 1313-1334, May.

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