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Auctions and (1987)
| Venue: | Journal of Economic Theory |
| Citations: | 16 - 0 self |
BibTeX
@ARTICLE{Mcafee87auctionsand,
author = {R. Preston Mcafee and Wendy Takacs and Daniel R. Vincent},
title = {Auctions and},
journal = {Journal of Economic Theory},
year = {1987},
volume = {25},
pages = {158--179}
}
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Abstract
A strategy to convert quotas to tariffs is to auction the quota rights and use the realized auction prices as guides to setting tariffs. In the 1980's, New Zealand employed auctions to allocate quota licenses. We analyze the relationship between tariff-equivalents and auction prices for auctions with resale. Using panel data from New Zealand's quota license auctions we estimate the expected value of the tariff equivalent. We exploit data from secondary market prices to test the model’s predictions. The predictions fail suggesting either that auction prices may understate or that aftermarket prices overstate the true tariff equivalent.
