Centre for Decision Research and Experimental Economics

CeDEx 2020-01: Affirmative Action through Endogenous Set-Asides


We study the effects of affirmative action through endogenous set-asides. We propose a share auction for dual sourcing in which more intensive affirmative action strengthens the favoured provider. This has the potential to level the playing field and induce more competitive procurement overall. Our main result provides a condition under which affirmative action not only guarantees very substantial minority representation, but also reduces the buyer’s provision cost compared to a first-price auction. We also show that our main result is robust to variations of our benchmark model, including the assumptions specifying what providers know about each other, and how affirmative action programs are implemented.

Download the paper in PDF format


José Alcalde and Matthias Dahm


View all CeDEx discussion papers | View all School of Economics featured discussion papers


Posted on Monday 10th February 2020

Centre for Decision Research and Experimental Economics

Sir Clive Granger Building
University of Nottingham
University Park
Nottingham, NG7 2RD

telephone: +44 (0)115 951 5458
Enquiries: jose.guinotsaporta@nottingham.ac.uk
Experiments: cedex@nottingham.ac.uk