Monitoring Governmental Disposition of Assets: Fashioning Regulatory Substitutes for Market Controls

Abstract:     
Each year the government sells or leases assets worth billions of dollars. The impact on the economy is staggering. FCC auctions to allocate rights to electromagnetic spectrum generated well over twenty billion dollars in the last three years. Proceeds from mineral leases, timber sales, and disposition of real estate from defaulting thrifts have generated another several billion dollars annually.

From the taxpayer's perspective, however, government disposition schemes have failed miserably. The government has donated valuable resources to preferred claimants, allocated scarce broadcast and oil rights resources by lottery, and sold both public land and rights to minerals beneath to private parties at a fraction of the market price. The government has also sold timber without any apparent cost-benefit justification, and awarded rights to use electromagnetic spectrum worth billions of dollars to communications giants at a substantial discount.

In the article, we analyze the different causes for regulatory failure -- historical, conceptual, and political -- and argue that reforms at both the congressional and administrative level are need to minimize the inefficiency and graft.

JEL Classifications: H1

Working Paper Series