Efficient and Equitable Airport Slot Allocation

This paper studies slot allocation at congested airports in Europe. First, I discuss the inefficiencies of the current regulation, introduced as part of the liberalisation process of the air transport market. Then, I consider three marked based methods which are suitable to achieve a more efficient allocation of slots to airlines: congestion pricing, auctions and secondary trading. These methods are examined in terms of their ability to improve efficiency and in terms of their implications on the distribution of slots’ scarcity rents. Special attention is drawn to complementarities between slots. Finally, I propose to auction slots periodically, allowing secondary trading well before the first auction takes place. By selling slots before the first auction incumbents can be partially compensated for the subsequent withdrawal of their slots.

Market and Non-Market Mechanisms for the Optimal Allocation of Scarce Resources

Both market (e.g. auctions) and non-market mechanisms (e.g. lotteries and priority lists) are used to allocate a large amount of scarce public resources that produce large private benefits and small consumption externalities. I study a model in which the use of both market and non-market mechanisms can be rationalized. Agents are risk neutral and heterogeneous in terms of their monetary value for a good and their opportunity cost of money, which are both private information. The designer wants to allocate a set of identical goods to the agents with the highest values. To achieve her goal, she can screen agents on the basis of their observable characteristics, and on the basis of information on their willingness to pay that she can extract using market mechanisms. In contrast to models where willingness to pay and value coincide, a first best cannot be achieved. My main result is that both market and non-market mechanisms, or hybrid mechanisms, can be optimal depending on the prior information available to the designer. In particular, non-market mechanisms may be optimal if the value is positively correlated with the opportunity cost of money.

What money can't buy: allocations with priority lists, lotteries and queues

I study the welfare optimal allocation of a number of identical and indivisible objects to a set of heterogeneous risk-neutral agents under the hypothesis that money is not available. Agents have independent private values, which represent the maximum time that they are will- ing to wait in line to obtain a good. A priority list, which ranks agents according to their expected values, is optimal when hazard rates of the distributions of values are increasing. Queues, which allocates the ob- ject to those who wait in line the longest, are optimal in a symmetric setting with decreasing hazard rates.rationing; queues; priority lists; lotteries.

Bilateral Trading in Networks

We study an incomplete-information model of sequential bargaining for a single object, with the novel feature that agents are located in a network. In each round of trade, the current owner of the object either consumes it or makes a take-it-or-leave-it offer to some connected trader. Traders may buy in order to consume or to resale to others. We show that the equilibrium price dynamics is non-monotone and that traders that intermediate the object arise endogenously and attain a pro t. We also provide insights on how traders' equilibrium payoffs depend on their location in the network.

Endogenous Trading Networks

We investigate the effects of a class of trading protocols on the architecture and efficiency properties of endogenously formed trading networks. In our model, the opportunity to sell valuable objects occurs randomly to different individuals. A sale can only be realized if two individuals are connected, directly or indirectly, but forming and maintaining a trading relation is a costly investment. When the outcome of trading is efficient and provides no intermediation rents, a tension between equilibrium and efficient networks emerges when the cost of forming a link is at an intermediate level. There are two types of inefficiencies. Either all equilibrium networks are under- connected when compared to efficient networks, or a multiplicity of equilibriam may exist and agents may fail to coordinate on the efficient equilibrium network

Endogenous Trading Networks

We investigate the effects of a class of trading protocols on the architecture and efficiency properties of endogenously formed trading networks. In our model, the opportunity to sell valuable objects occurs randomly to different individuals. A sale can only be realized if two individuals are connected, directly or indirectly, but forming and maintaining a trading relation is a costly investment. When the outcome of trading is efficient and provides no intermediation rents, a tension between equilibrium and efficient networks emerges when the cost of forming a link is at an intermediate level. There are two types of inefficiencies. Either all equilibrium networks are under- connected when compared to efficient networks, or a multiplicity of equilibriam may exist and agents may fail to coordinate on the efficient equilibrium networ

Surplus sharing in Cournot oligopoly

We characterize equilibria of oligopolistic markets where identical rms with constant marginal cost compete a' la Cournot. For given maximal willingness to pay and maximal total demand, we rst identify all combinations of equilibrium consumer surplus and industry prot that can arise from arbitrary demand functions. Then, as a further restriction, we x the average willingness to pay above marginal cost (i.e., rst-best surplus) and identify all possible triples of consumer surplus, industry prot and deadweight loss

Selling Through Referrals

A seller has an object for sale and can reach buyers only through intermediaries, who also have privileged information about buyers’ valuations. Intermediaries can either mediate the transaction by buying the object and reselling it–the merchant model–or refer buyers to the seller and release information for a fee–the agency model. The merchant model suffers from double marginalization. The agency model suffers from adverse selection: Intermediaries would like to refer low-value buyers, but retain high-value ones and make profits from resale. We show that, in equilibrium, intermediaries specialize in agency. Seller’s and intermediaries’ joint profits equal the seller’s profits when he has access to all buyers and all intermediaries’ information. Profits’ division depends on seller’s and intermediaries’ relative bargaining power. Our results rationalize the prevalence of the agency model in online markets