How to avoid transferring a valuable asset

Abstract

Many mechanisms (such as auctions) efficiently allocate an asset to the firm which values it most highly. But sometimes the asset’s owner may benefit from the transfer only if the asset is not too valuable to potential buyers. In this setting, we examine the efficiency of mechanisms when the potential buyers have private information about the asset’s value. We show that rent seeking, and lobbying, rather than merely wasting resources, can lead to allocations which are close to efficient.

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Correspondence to Amihai Glazer.

Additional information

We are indebted to David Malueg, the associate editor, and to three referees for valuable comments.

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Bucovetsky, S., Glazer, A. How to avoid transferring a valuable asset. Public Choice 138, 3–8 (2009). https://doi.org/10.1007/s11127-008-9306-x

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Keywords

  • Rent seeking
  • Lobbying
  • Auctions
  • Asymmetric information

JEL Classification

  • D44
  • D72
  • D82