Market versus Non-Market Assignment of Ownership

34 Pages Posted: 17 Jan 2009

See all articles by Yeon-Koo Che

Yeon-Koo Che

Columbia University

Ian L. Gale

Georgetown University - Department of Economics

Date Written: January 16, 2009


We compare different methods of assigning ownership of a good when some agents are wealth-constrained. When a good is sold at the market-clearing price, a high-wealth individual may buy it but a low-wealth (or illiquid) individual may not, even if the latter individual would have the higher valuation given equal wealth. Schemes that assign the good randomly may yield higher welfare than the competitive market would - if the recipients of the good are allowed to resell.

Need-based schemes that favor the poor are particularly desirable. The ability to resell is critical to the results, but resale induces speculators to participate, so regulation of resale may be beneficial.

Keywords: non-market assignment, rationing, resale, speculation

JEL Classification: D44, D45, H42, I38, K11

Suggested Citation

Che, Yeon-Koo and Gale, Ian L., Market versus Non-Market Assignment of Ownership (January 16, 2009). Available at SSRN: or

Yeon-Koo Che

Columbia University ( email )

420 W. 118th Street, 1016IAB
New York, NY 10027
United States
212-854-8276 (Phone)


Ian L. Gale (Contact Author)

Georgetown University - Department of Economics ( email )

Washington, DC 20057
United States
(202) 687-5732 (Phone)

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