The Role of Auctions in Allocating Public Resources

'The Role of Auctions in Allocating Public Resources' by Chris Chan, Patrick Laplagne and David Appels, was released on 20 February 2003. The paper provides an economic framework with which to consider the effectiveness and limitations of auction markets in allocating public resources. It links auction outcomes to bidders' behavioural characteristics and to the lack or imbalance of information available to governments and bidders. The analysis covers the key elements of an auction, including the auction form, the auction environment, the bidding behaviour and the implications for allocative efficiency and revenue. The views expressed in this paper are those of the staff involved and do not necessarily reflect those of the Productivity Commission.