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FISCAL POLICY

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The allocative power of auctions

How do we best allocate scarce resources? Imran Tahir of the Institute for Fiscal Studies explains how auctions work and how they can be designed to be more economically efficient

If you’ve ever watched Bargain Hunt, you’ll know that one method of allocating items in limited supply is an auction. In case you haven’t watched it — participants on the show purchase a collection of antiques and other items which they hope will make them a profit, and at the end of each episode these items are auctioned.

While an auction itself makes for exciting viewing, it provides more than just entertainment value. It solves the allocation problem by finding the bidder who’s willing to pay the most and in the process determines the price.

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The impact of Covid-19 on the employment of young people

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