Auction Experiments and Simulations of Milk Quota Exchanges
AbstractSince 2000 Germany has a fairly unique market mechanism to trade milk quotas between dairy farms. The two major features are: (1) a quasi auctioning system that produces excess demands which are covered by state reserves free of charge and (2) a price band is used to exclude high price bids. For both features an experimental design is developed to study their impact in comparison to a regular seller’s sealed bid double auction. Results show that both treatments lead to significant misallocations. These are due the direct impact of regulations and due to an imperfect adjustment of bidding functions towards them. The major goal of the market design to reduce quota prices is reached, however, at significant trade losses.
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Bibliographic InfoPaper provided by Agricultural and Applied Economics Association in its series 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado with number 61304.
Date of creation: 2010
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Double Auction; Experiment; Milk Quota; Germany; Institutional and Behavioral Economics; Research Methods/ Statistical Methods; L11; D44; Q13;
Other versions of this item:
- Brummer, Bernhard & Loy, Jens-Peter & Requate, Till, 2011. "Auction Experiments and Simulations of Milk Quota Exchanges," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114377, European Association of Agricultural Economists.
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
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