How Food Banks Use Markets to Feed the Poor
Journal of Economic Perspectives
vol. 31,
no. 4, Fall 2017
(pp. 145-62)
(Complimentary)
Abstract
A difficult issue for organizations is how to assign valuable resources across competing opportunities. This work describes how Feeding America allocates about 300 million pounds of food a year to over two hundred food banks across the United States. It does so in an unusual way: in 2005, it switched from a centralized queuing system, where food banks would wait their turn, to a market-based mechanism where they bid daily on truckloads of food using a "fake" currency called shares. The change and its impact are described here, showing how the market system allowed food banks to sort based on their preferences.Citation
Prendergast, Canice. 2017. "How Food Banks Use Markets to Feed the Poor." Journal of Economic Perspectives, 31 (4): 145-62. DOI: 10.1257/jep.31.4.145Additional Materials
JEL Classification
- D44 Auctions
- D82 Asymmetric and Private Information; Mechanism Design
- L31 Nonprofit Institutions; NGOs; Social Entrepreneurship
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