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The cost effectiveness of the U.S. export enhancement program bonus allocation mechanism
- Wang, H., Sexton, R.J.
- American journal of agricultural economics 2004 v.86 no.2 pp. 375-388
- cost effectiveness, exports, United States
- The U.S. Export Enhancement Program is evaluated from the perspective of the cost effectiveness of its bonus allocation mechanism. The current mechanism resembles a discriminatory-price, common-value auction. However, auction theory suggests that a discriminatory auction may not be optimal in this setting for several reasons. This article evaluates the current format relative to an alternative, uniform-price auction. Estimation results reveal evidence of strategic bidder behavior under the current format and simulations suggest that adopting a uniform-price auction format for bonus allocation may yield considerable savings to the Treasury by eliminating incentives to pad bids and increasing participation in the auction.