Auction Experiments and Simulations of Milk Quota Exchanges
AbstractSince 2000 Germany has introduced 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 that is used to exclude highest bids. For both features an experimental design is developed to study the impact in reference to a regular seller’s sealed bid double auction. Results show that both treatments lead to significant misallocations. These are due to the direct impact of regulations and due to an imperfect adjustment of bidding functions. 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 European Association of Agricultural Economists in its series 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland with number 114377.
Date of creation: 2011
Date of revision:
Other versions of this item:
- Brummer, Bernhard & Loy, Jens-Peter & Requate, Till, 2010. "Auction Experiments and Simulations of Milk Quota Exchanges," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61304, Agricultural and Applied Economics Association.
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-10-15 (All new papers)
- NEP-EXP-2011-10-15 (Experimental Economics)
- NEP-REG-2011-10-15 (Regulation)
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