Set-Asides and Subsidies in Auctions ∗

  title={Set-Asides and Subsidies in Auctions ∗},
  author={Susan Athey},
Set-asides and subsidies are used extensively in government procurement and natural resource sales. Economic theory is ambiguous on how such policies affect both auction participation and auction prices. We study the use of these policies, targeted at small businesses, in the context of U.S. Forest Service timber auctions. Empirically, the decline in large bidders at set-aside auctions is matched by an increase in smaller bidders, with only slight revenue effects. We then compare the existing… CONTINUE READING
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