Dissertations, Theses and Capstone Projects

Date of Award

Spring 2009

Degree Type


Degree Name

Master of Public Administration (MPA)


Political Science


The purpose of this study is to provide an exploratory analysis of public resources’ allocation through online auctions. Online auctions are new ways of public resource allocation in China, but they are promising because of its broad participation and low transaction costs. In addition, compared to traditional administrative allocation mechanisms, auction methods could resolve the rent-seeking problem. One important point for an online auction is to design a certain set of rules to attract the targeted people to realize the rule-maker’s goal. But why can a certain set of rules affect the participants’ actions? To answer this question, it is necessary to analyze the essence of human nature, because actions are instructed by ideas, while ideals are determined by human nature.

What is the essential characteristic of men? It is greed. Once a man comes to the world, he wants to maintain his life, and then greed appears. In addition, human nature is alterable. Therefore, participants’ actions instructed by ideas are alterable. This is the meaning of designing different auction rules. Moreover, different rules of auctions are determined by different auction goals. Because public resources are natural monopoly, specialty assets shared by the public and have long time usage, the government should design a mechanism to find the maximum value of the resources and to allocate them to the bidder who has the biggest probability to realize his or her value. Here the maximum value of resources involves not only efficiency, but also equity due to its “public” characteristic. Open ascending auction is relatively a good method of allocation because it provides bidders with more information, in terms of efficiency and equity.

In conclusion, since public resources are owned by the citizens, its allocation should help the public to make a profit. But nowadays, many government agencies have sold public resources to make their own profits by sacrificing the public’s interests. These actions have the tendency of making governments to deviate from their missions. To ensure that the general public will earn some profits, when designing auction rules, three questions must be answered: what is the goal of the auction? What rules should be designed to realize the goal? Who is to empower the auctioneer to auction? Only after these questions are clearly answered, can any auction by a public entity be successful.