A New Evaluation Criterion for Allocation Mechanisms with Application to Vehicle License Allocations in China

DOI link to open access article: A New Evaluation Criterion for Allocation Mechanisms with Application to Vehicle License Allocations in China

Jianxin Rong, Ning Sun, Dazhong Wang

Journal of Mechanism and Institution Design
Volume 4, issue 1, pages 39-86 (November 2019)
doi: 10.22574/jmid.2019.11.002

Abstract:

In this paper, we propose an equality measure for allocation mechanisms with budget constraints to describe the difference in object obtaining opportunities among buyers with different budget ranks. We evaluate allocation mechanisms not only from the perspective of efficiency and revenue, but also with the criterion of equality. As an application of this new evaluation criterion -- the equality measure, we study the vehicle license allocation problem in China, introduce a class of hybrid auction-lottery mechanisms, and evaluate China's vehicle license allocation in a unified framework from the criteria of efficiency, equality, and revenue.

Keywords: Equality under budget constraints, hybrid mechanism, vehicle license allocation.

JEL Classification Numbers: D44, D47.