Optimal pricing of public lotteries and comparison of competing mechanisms

    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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