Efficient assignment mechanisms for liquidity-constrained agents

► We study alternative methods of assigning scarce resources to individuals who may be liquidity-constrained. ► Selling the resources via auctions is natural but leads to inefficiencies when agents are liquidity-constrained. ► Random assignment achieves higher utilitarian efficiency, if resale is allowed. ► Need-based assignment and lotteries with entry fees could also be desirable. ► The optimal mechanism displays features of the non-market schemes such as in-kind and cash subsidies.