Monday, February 01, 2016

Allocating Goods

There are a number of economic goods (I love to play like I'm an economist) with a price, but a price which is less than the value which an ideal market might place on them.  The goods aren't sold in a free market, but some hybrid of the market and an allocation process. To my eye, these goods usually get allocated on the "who you know" principle.  Examples:
  • tickets for playoff games go to relatives of the players, the staff, the owners.  I understand there's a set allocation for teams, but within the allocation getting a ticket is less a question of money than of influence or the strength of the relationship.
  • IPO shares go to those connected with the underwriters of the offering.  Again I understand the bank will allocate shares to their best customers.
  • many jobs. 

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