Optimal In-Kind Redistribution

Zi Yang Kang; Mitch Watt

doi:10.1145/3736252.3742539

Optimal In-Kind Redistribution

Zi Yang Kang
, Mitch Watt

Research output: Contribution to conference › Abstract › peer-review

Abstract

In this paper, we develop a model of in-kind redistribution where consumers participate in either a private market or a government-designed program, but not both. We characterize when a social planner, seeking to maximize weighted total surplus, can strictly improve upon the laissez-faire outcome. We show that the optimal mechanism consists of three components: a public option, nonlinear subsidies, and laissez-faire consumption. We quantify the resulting distortions and relate them to the correlation between consumer demand and welfare weights. Our findings reveal that while private market access constrains the social planner's ability to redistribute, it also strengthens the rationale for non-market allocations.

A full version of this paper can be found at: https://arxiv.org/pdf/2409.06112.

Original language	English
Pages	343
Number of pages	1
DOIs	https://doi.org/10.1145/3736252.3742539
Publication status	Published - 2025
Externally published	Yes
Event	ACM Conference on Economics and Computation 2025 - Stanford University, Stanford, United States of America Duration: 7 Jul 2025 → 10 Jul 2025 Conference number: 26th https://ec25.sigecom.org/ (Conference website) https://dl.acm.org/doi/proceedings/10.1145/3736252 (Conference proceedings)

Conference

Conference	ACM Conference on Economics and Computation 2025
Abbreviated title	EC 2025
Country/Territory	United States of America
City	Stanford
Period	7/07/25 → 10/07/25
Internet address	https://ec25.sigecom.org/ (Conference website) https://dl.acm.org/doi/proceedings/10.1145/3736252 (Conference proceedings)

Access to Document

10.1145/3736252.3742539

Cite this

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title = "Optimal In-Kind Redistribution",

abstract = "In this paper, we develop a model of in-kind redistribution where consumers participate in either a private market or a government-designed program, but not both. We characterize when a social planner, seeking to maximize weighted total surplus, can strictly improve upon the laissez-faire outcome. We show that the optimal mechanism consists of three components: a public option, nonlinear subsidies, and laissez-faire consumption. We quantify the resulting distortions and relate them to the correlation between consumer demand and welfare weights. Our findings reveal that while private market access constrains the social planner's ability to redistribute, it also strengthens the rationale for non-market allocations. A full version of this paper can be found at: https://arxiv.org/pdf/2409.06112.",

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pages = "343",

note = "ACM Conference on Economics and Computation 2025, EC 2025 ; Conference date: 07-07-2025 Through 10-07-2025",

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AB - In this paper, we develop a model of in-kind redistribution where consumers participate in either a private market or a government-designed program, but not both. We characterize when a social planner, seeking to maximize weighted total surplus, can strictly improve upon the laissez-faire outcome. We show that the optimal mechanism consists of three components: a public option, nonlinear subsidies, and laissez-faire consumption. We quantify the resulting distortions and relate them to the correlation between consumer demand and welfare weights. Our findings reveal that while private market access constrains the social planner's ability to redistribute, it also strengthens the rationale for non-market allocations. A full version of this paper can be found at: https://arxiv.org/pdf/2409.06112.

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