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Private Information and the Allocation of Land Use Subsidies in Malawi

  • B. Kelsey Jack

Efficient targeting of public programs is difficult when the cost or benefit to potential recipients is private information. This study illustrates the potential of self-selection to improve allocational outcomes in the context of a program that subsidizes tree planting in Malawi. Landholders who received a tree planting contract as a result of bidding in an auction kept significantly more trees alive over a three year period than did landholders who received the contract through a lottery. The gains from targeting on private information through the auction represent a 30 percent cost savings per surviving tree for the implementing organization.

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Article provided by American Economic Association in its journal American Economic Journal: Applied Economics.

Volume (Year): 5 (2013)
Issue (Month): 3 (July)
Pages: 113-35

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Handle: RePEc:aea:aejapp:v:5:y:2013:i:3:p:113-35
Note: DOI: 10.1257/app.5.3.113
Contact details of provider: Web page: https://www.aeaweb.org/aej-applied
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  1. Gregory Fischer & James Berry & Raymond Guiteras, 2012. "Eliciting and utilizing willingness to pay: evidence from field trials in Northern Ghana," LSE Research Online Documents on Economics 47913, London School of Economics and Political Science, LSE Library.
  2. Chassang, Sylvain & PadrĂ³ i Miquel, Gerard & Snowberg, Erik, 2010. "Selective Trials: A Principal-Agent Approach to Randomized Controlled Experiments," CEPR Discussion Papers 8003, C.E.P.R. Discussion Papers.
  3. Doug Miller & A. Colin Cameron & Jonah B. Gelbach, 2006. "Bootstrap-Based Improvements for Inference with Clustered Errors," Working Papers 621, University of California, Davis, Department of Economics.
  4. Jessica Cohen & Pascaline Dupas, 2010. "Free Distribution or Cost-Sharing? Evidence from a Randomized Malaria Prevention Experiment," The Quarterly Journal of Economics, MIT Press, vol. 125(1), pages 1-45, February.
  5. Ajayi, Oluyede C. & Jack, B. Kelsey & Leimona, Beria, 2012. "Auction Design for the Private Provision of Public Goods in Developing Countries: Lessons from Payments for Environmental Services in Malawi and Indonesia," World Development, Elsevier, vol. 40(6), pages 1213-1223.
  6. Nava Ashraf & James Berry & Jesse M. Shapiro, 2010. "Can Higher Prices Stimulate Product Use? Evidence from a Field Experiment in Zambia," American Economic Review, American Economic Association, vol. 100(5), pages 2383-2413, December.
  7. Besley, Timothy & Coate, Stephen, 1992. "Workfare versus Welfare Incentive Arguments for Work Requirements in Poverty-Alleviation Programs," American Economic Review, American Economic Association, vol. 82(1), pages 249-61, March.
  8. Subhrendu K. Pattanayak & Sven Wunder & Paul J. Ferraro, 2010. "Show Me the Money: Do Payments Supply Environmental Services in Developing Countries?," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 4(2), pages 254-274, Summer.
  9. Ferraro, Paul J., 2008. "Asymmetric information and contract design for payments for environmental services," Ecological Economics, Elsevier, vol. 65(4), pages 810-821, May.
  10. Sheriff, Glenn, 2009. "Implementing second-best environmental policy under adverse selection," Journal of Environmental Economics and Management, Elsevier, vol. 57(3), pages 253-268, May.
  11. Uwe Latacz-Lohmann & Carel Van der Hamsvoort, 1997. "Auctioning Conservation Contracts: A Theoretical Analysis and an Application," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(2), pages 407-418.
  12. Vivi Alatas & Abhijit Banerjee & Rema Hanna & Benjamin A. Olken & Julia Tobias, 2012. "Targeting the Poor: Evidence from a Field Experiment in Indonesia," American Economic Review, American Economic Association, vol. 102(4), pages 1206-40, June.
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