The Politics of Auctions

Over at Economic Principals, David Warsh has a nice post about how political considerations often limit the use of auctions in solving public policy challenges.

In principle, auctions are a powerful tool for allocating public assets in an efficient and transparent manner.  The FCC has had great success auctioning off portions of the radio spectrum, for example, and the Treasury uses auctions every week to sell the debt necessary to finance our government.  But other uses of auctions — e.g., to allocate landing slots at congested airports or to distribute allowances under a climate cap-and-trade program — face strong opposition from some businesses and some politicians. (ht: Marginal Revolution)

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