Home / What happens when America's Soviet-style food banks embrace free-market economics?  
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Feeding America is a network of food banks that feeds more than 46 million people. In 2005, four professors at the University of Chicago helped replace their centralized distribution system with an auction-based one, allocating "shares" to each bank to bid on donated food. This is a summary of a more detailed paper describing the transition to the new system and its overall success: The Allocation of Food to Food Banks [pdf].

Initially, there was plenty of resistance. As one food bank director told Canice Prendergast, an economist advising Feeding America, "I am a socialist. That's why I run a food bank. I don't believe in markets. I'm not saying I won't listen, but I am against this." But the Chicago economists managed to design a market that worked even for participants who did not believe in it. Within half a year of the auction system being introduced, 97 percent of food banks won at least one load, and the amount of food allocated from Feeding America's headquarters rose by over 35 percent, to the delight of volunteers and donors.

The end result has been an improvement over the centralized scheme, whereby "a lot of food rotted in places where it was not needed, while many shelves in other food banks stood empty." 

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