Conservation auctions such as the Conservation Reserve Program in the United States and the BushTender Program in Australia have been used to identify landholders who can provide on-farm conservation and biodiversity protection actions at lowest cost. These conservation auctions are typically framed as closed, discriminatory, single round, first-price auctions, and are based on the assumption that landholders will offer bids determined by their 'independent private values'. However bid values may also be influenced by other factors such as concerns about 'winner's curse', a desire to capture economic rent, and premiums for risk and uncertainty factors. Sealed, single round auctions may exacerbate information gaps and uncertainty factors because of the limited information flows compared to traditional market exchanges and open, ascending auctions. In this paper, the cost-efficiencies of a multiple round auction for landholder management actions are explored with the use of field experiments. Results suggest that multiple round auctions may be associated with efficiency gains, particularly in initial rounds. However, multiple round auctions can also involve higher transaction and administration costs, so the net advantages need to be assessed on a case by case basis before these are used to purchase environmental services.
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Paper provided by International Association of Agricultural Economists in its series Discussion Papers with number
25801.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Amar Cheema & Peter Leszczyc & Rajesh Bagchi & Richard Bagozzi & James Cox & Utpal Dholakia & Eric Greenleaf & Amit Pazgal & Michael Rothkopf & Michael Shen & Shyam Sunder & Robert Zeithammer, 2005.
"Economics, Psychology, and Social Dynamics of Consumer Bidding in Auctions,"
Marketing Letters,
Springer, vol. 16(3), pages 401-413, December.
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