Speaker: Martin Hagen, Universidad Carlos III de Madrid
"This paper offers a novel perspective on refugee relocation in the European Union. In 2015, Greece and Italy experienced a dramatic influx of migrants. The European Commission responded by relocating refugees to other EU Member States. The latter received a fixed payment for each person they were willing to host, yet they accepted only a small number. Why did the Commission use such a "fi xed-price mechanism"? And were there better alternatives? The main issue, we argue, is that national governments have private information on their costs of asylum provision. Modeling refugee relocation as a procurement problem, we provide a rationale for the use of a fixed-price mechanism: it is the only mechanism that eliminates all forms of strategic behavior by individual countries and coalitions. In addition, we characterize the mechanisms that become available under weaker notions of strategicrobustness. While they are more flexible than fixed prices, a numerical simulation suggests that the potential increase in relocations would have likely been minor. Overall, our fi ndings offer a normative justification for the EU's handling of the "refugee crisis".