A New Evaluation Criterion for Allocation Mechanisms with Application to Vehicle License Allocations in China

Abstract

In this paper, we propose an equality measure for allocation mechanisms with budget constraints to describe the difference in object obtaining opportunities among buyers with different budget ranks. We evaluate allocation mechanisms not only from the perspective of efficiency and revenue, but also with the criterion of equality. As an application of this new evaluation criterion -- the equality measure, we study the vehicle license allocation problem in China, introduce a class of hybrid auction-lottery mechanisms, and evaluate China's vehicle license allocation in a unified framework from the criteria of efficiency, equality, and revenue.