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Evaluating the potential contribution of contract auctions to Agri-Environmental Policy efficiency: A simulation model for Emilia-Romagna (Italy)

  • Viaggi, Davide
  • Raggi, Meri
  • Gallerani, Vittorio

Auctions are a potentially suitable policy tool for increasing the efficiency of Agri- Environmental Schemes (AES) through an improved allocation of contracts. In theory, through the auction mechanism, farmers have incentives to reveal their compliance costs, helping to reduce information rents and increase policy cost-effectiveness. The aim of this paper is to simulate the potential contribution of auction mechanisms to the efficiency of AES in Emilia-Romagna (Italy). The results show advantages for auctions compared with traditional flat rate payments based on average compliance costs. However, their performance is worse than flat payments based on marginal compliance costs.

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Article provided by Greek Association of Agricultural Economists in its journal Agricultural Economics Review.

Volume (Year): 11 (2010)
Issue (Month): 2 (June)

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Handle: RePEc:ags:aergaa:118671
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  1. Klemperer, Paul, 2000. "What Really Matters in Auction Design," CEPR Discussion Papers 2581, C.E.P.R. Discussion Papers.
  2. Uwe Latacz-Lohmann & Carel P. C. M. Hamsvoort, 1998. "Auctions as a Means of Creating a Market for Public Goods from Agriculture," Journal of Agricultural Economics, Wiley Blackwell, vol. 49(3), pages 334-345.
  3. 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.
  4. McAfee, R Preston & McMillan, John, 1987. "Auctions and Bidding," Journal of Economic Literature, American Economic Association, vol. 25(2), pages 699-738, June.
  5. Thilo W. Glebe, 2008. "Scoring two-dimensional bids: how cost-effective are agri-environmental auctions?," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 35(2), pages 143-165, June.
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