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Are Auctions More Efficient Than Fixed Price Schemes When Bidders Learn?

Author

Listed:
  • Atakelty Hailu

    (School of Agricultural & Resource Economics, The University of Western Australia, 35 Stirling Highway, Crawley WA 6009.)

  • Steven Schilizzi

    (School of Agricultural & Resource Economics, The University of Western Australia, 35 Stirling Highway, Crawley WA 6009.)

Abstract

Auctions are increasingly being considered as a mechanism for allocating conservation contracts to private landowners. This interest is based on the widely held belief that competitive bidding helps minimize information rents. This study constructs an agent-based model to evaluate the long-term performance of conservation auctions under settings where bidders are allowed to learn from previous outcomes. The results clearly indicate that the efficiency benefits of one-shot auctions are quickly eroded under dynamic settings. Furthermore, the auction mechanism is not found to be superior to fixed payment schemes except when the latter involve the use of high prices.

Suggested Citation

  • Atakelty Hailu & Steven Schilizzi, 2004. "Are Auctions More Efficient Than Fixed Price Schemes When Bidders Learn?," Australian Journal of Management, Australian School of Business, vol. 29(2), pages 147-168, December.
    • Handle: RePEc:sae:ausman:v:29:y:2004:i:2:p:147-168
    DOI: 10.1177/031289620402900201
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    References listed on IDEAS

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