Title

Optimal pricing of public lotteries and comparison of competing mechanisms

Authors

Authors

C. Ling;D. Scrogin

Comments

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Abbreviated Journal Title

Appl. Econ.

Keywords

public lotteries; rationing; lottery pricing; consumer surplus; WAITING-LINE AUCTION; GOODS; PARTICIPATION; ALLOCATION; TARIFF; Economics

Abstract

This article establishes optimal pricing rules for rationing indivisible units of rival and otherwise nonexcludable goods by lottery or a hybrid of a lottery and outright sale by posted price. Given the distributional objective of maximizing expected consumer surplus, the solutions to unconstrained and constrained versions of the pricing problem may be expressed in classic inverse elasticity form, with the lottery price appearing as an entry fee, user fee or a combination of the two. Numerical analysis of a rich class of private value distributions indicates that sizable gains in expected consumer surplus can be realized over competitive pricing and zero pricing.

Journal Title

Applied Economics

Volume

46

Issue/Number

26

Publication Date

1-1-2014

Document Type

Article

Language

English

First Page

3211

Last Page

3223

WOS Identifier

WOS:000338008000007

ISSN

0003-6846

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