Essays on group-based redistribution in college admissions and government procurement

This dissertation is on the optimal design of group-based redistribution in college admissions and government procurement. Chapter 1 presents a conceptual framework for understanding the consequences of the widespread adoption of "race-neutral alternatives" to conventional affirmative action policies in college admissions. A simple model of applicant competition with endogenous effort is utilized to show that, in comparison to color-conscious affirmative action, these color-blind alternatives can significantly lower the efficiency of the student selection process in equilibrium. We examine data on matriculates at several selective colleges and universities to estimate the magnitudes involved. It is shown that the short-run efficiency losses of implementing color-blind affirmative action (in our sample) are four to five times as high as color-conscious affirmative action.; Chapter 2 analyzes group-based redistribution in the context of government procurement auctions. I show that the unequal treatment of firms may enhance the competition among firms and maximizes the government's revenue. I also analyze the auction design problem where the firms invest before the auction. An auction mechanism which applies the same rules to all firms maximizes the government's revenue in this model. However, the government may still want to apply favorable rules to the disadvantaged firms because it may have preferences over which firm wins the auction (for example, because of affirmative action). I show that the favored firms' investment level increases as the preference of the government gets more intense.; In Chapter 3, I analyze the effect of collusion in financial aid decisions. Twenty seven prestigious colleges started to hold annual meetings in 1958. In these meetings, the colleges arranged to award the same financial aid to each student that two or more of them commonly admitted. The Department of Justice (DOJ) accused the colleges of price collusion in 1991. The colleges opposed this accusation by claiming that the meetings were held to implement their financial aid policy. I show that the meetings increased the participants' average student quality. I use this empirical evidence and a simple duopoly model to understand the validity of the contradicting claims of the DOJ and the colleges.