IDEAS home Printed from https://ideas.repec.org/p/arx/papers/2409.06112.html
   My bibliography  Save this paper

Optimal In-Kind Redistribution

Author

Listed:
  • Zi Yang Kang
  • Mitchell Watt

Abstract

This paper develops a model of in-kind redistribution where consumers participate in either a private market or a government-designed program, but not both. We characterize when a social planner, seeking to maximize weighted total surplus, can strictly improve upon the laissez-faire outcome. We show that the optimal mechanism consists of three components: a public option, nonlinear subsidies, and laissez-faire consumption. We quantify the resulting distortions and relate them to the correlation between consumer demand and welfare weights. Our findings reveal that while private market access constrains the social planner's ability to redistribute, it also strengthens the rationale for non-market allocations.

Suggested Citation

  • Zi Yang Kang & Mitchell Watt, 2024. "Optimal In-Kind Redistribution," Papers 2409.06112, arXiv.org, revised Oct 2024.
    • Handle: RePEc:arx:papers:2409.06112
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/2409.06112
    File Function: Latest version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Daniel Waldinger, 2021. "Targeting In-Kind Transfers through Market Design: A Revealed Preference Analysis of Public Housing Allocation," American Economic Review, American Economic Association, vol. 111(8), pages 2660-2696, August.
    2. Zachary Liscow & Abigail Pershing, 2022. "Why Is So Much Redistribution In-Kind and Not in Cash? Evidence from a Survey Experiment," National Tax Journal, University of Chicago Press, vol. 75(2), pages 313-354.
    3. Yeon-Koo Che & Ian Gale & Jinwoo Kim, 2013. "Assigning Resources to Budget-Constrained Agents," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 80(1), pages 73-107.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Martin Ravallion, 2022. "On the Gains from Tradable Benefits‐in‐kind: Evidence for Workfare in India," Economica, London School of Economics and Political Science, vol. 89(355), pages 770-787, July.
    2. Bogomolnaia, Anna & Moulin, Herve, 2015. "Size versus fairness in the assignment problem," Games and Economic Behavior, Elsevier, vol. 90(C), pages 119-127.
    3. Katharina Huesmann & Achim Wambach, 2015. "Constraints on Matching Markets Based on Moral Concerns," CESifo Working Paper Series 5356, CESifo.
    4. Condorelli, Daniele, 2013. "Market and non-market mechanisms for the optimal allocation of scarce resources," Games and Economic Behavior, Elsevier, vol. 82(C), pages 582-591.
    5. Pamela Campa & Lucija Muehlenbachs, 2024. "Addressing Environmental Justice through In-Kind Court Settlements," American Economic Journal: Economic Policy, American Economic Association, vol. 16(1), pages 415-446, February.
    6. Tymofiy Mylovanov & Andriy Zapechelnyuk, 2017. "Optimal Allocation with Ex Post Verification and Limited Penalties," American Economic Review, American Economic Association, vol. 107(9), pages 2666-2694, September.
    7. Martin Ravallion, 2021. "On the Gains from Tradeable Benefits-in-Kind," Working Papers gueconwpa~21-21-13, Georgetown University, Department of Economics.
    8. Cristina Cattaneo & Daniela Grieco & Nicola Lacetera & Mario Macis, 2024. "Out-group Penalties in Refugee Assistance: A Survey Experiment," NBER Working Papers 32139, National Bureau of Economic Research, Inc.
    9. Nikhil Agarwal & Eric Budish, 2021. "Market Design," NBER Working Papers 29367, National Bureau of Economic Research, Inc.
    10. Suwei Feng & Qiang Li, 2018. "Evaluating the car ownership control policy in Shanghai: a structural vector auto-regression approach," Transportation, Springer, vol. 45(1), pages 205-232, January.
    11. Holzer, Jorge & McConnell, Kenneth, 2023. "Extraction rights allocation with liquidity constraints," Resource and Energy Economics, Elsevier, vol. 71(C).
    12. Takanori Ida & Takunori Ishihara & Koichiro Ito & Daido Kido & Toru Kitagawa & Shosei Sakaguchi & Shusaku Sasaki, 2022. "Choosing Who Chooses: Selection-Driven Targeting in Energy Rebate Programs," NBER Working Papers 30469, National Bureau of Economic Research, Inc.
    13. Takanori Ida & Takunori Ishihara & Koichiro Ito & Daido Kido & Toru Kitagawa & Shosei Sakaguchi & Shusaku Sasaki, 2021. "Paternalism, Autonomy, or Both? Experimental Evidence from Energy Saving Programs," Papers 2112.09850, arXiv.org.
    14. Georgios Gerasimou, 2020. "Ordinal Intensity-Efficient Allocations," Papers 2011.04306, arXiv.org, revised Jan 2024.
    15. Ghosh, Gagan, 2021. "Simultaneous auctions with budgets: Equilibrium existence and characterization," Games and Economic Behavior, Elsevier, vol. 126(C), pages 75-93.
    16. Andrzej Baranski & David J. Cooper & Guillaume Fréchette, 2024. "Introduction to the special issue in honor of John H. Kagel," Experimental Economics, Springer;Economic Science Association, vol. 27(1), pages 1-8, March.
    17. Georgios Gerasimou, 2019. "Simple Preference Intensity Comparisons," Discussion Paper Series, School of Economics and Finance 201905, School of Economics and Finance, University of St Andrews, revised 27 Apr 2020.
    18. Pai, Mallesh M. & Vohra, Rakesh, 2014. "Optimal auctions with financially constrained buyers," Journal of Economic Theory, Elsevier, vol. 150(C), pages 383-425.
    19. Ellen, Ingrid Gould & O’Regan, Katherine & Strochak, Sarah, 2024. "Race, Space, and Take Up: Explaining housing voucher lease-up rates," Journal of Housing Economics, Elsevier, vol. 63(C).
    20. Rilinger, Georg, 2021. "The organizational roots of market design failure structural abstraction, the limits of hierarchy, and the California energy crisis of 2000/01," MPIfG Discussion Paper 21/6, Max Planck Institute for the Study of Societies.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arx:papers:2409.06112. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: arXiv administrators (email available below). General contact details of provider: http://arxiv.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.