TY  - JOUR
AU  - Krishna,Kala
TI  - Making Altruism Pay in Auction Quotas
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 3230
PY  - 1990
Y2  - December 1990
UR  - http://www.nber.org/papers/w3230
L1  - http://www.nber.org/papers/w3230.pdf
N1  - Author contact info:
Kala Krishna
Department of Economics
523 Kern Graduate Building
The Pennsylvania State University
University Park, PA 16802
Tel: 814/865-1106
Fax: 814/863-4775
E-Mail: kmk4@psu.edu
AB  - With imperfectly competitive product markets, producers react to the auction of quota licenses by adjusting price upwards from the free trade level. As a result, license revenues are significantly lower than if markets were perfectly competitive. In fact, they are often zero unless quotas are very restrictive. In such markets, giving part of these revenues to the producers reduces the incentive to raise product prices and leads to the reappearance of revenues from auctioning quota licenses. With a foreign monopoly and no price discrimination, such a policy can lead to a Pareto improvement over free trade. The conditions under which such altruism raises welfare both from free trade and from the status quo are explored. 
ER  -