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Environmental services auctions under regulatory threat

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  • Holmes, William B.

Abstract

This paper examines how strategic responses of bidders and efficiency properties are impacted in auctions for the procurement of environmental services when a threat of regulation is levied. Laboratory experiments reveal characteristics of bidder behavior in different regulatory environments. Experimental results provide insight into efficiency and equity tradeoffs inherent in regulatory policy applications with respect to environmental services auctions. While it is possible to reduce the amount of public funds necessary to purchase a given level of environmental services, adverse selection costs and equity considerations may outstrip the benefits gained from threat implementation.

Suggested Citation

  • Holmes, William B., 2017. "Environmental services auctions under regulatory threat," Land Use Policy, Elsevier, vol. 63(C), pages 584-591.
    • Handle: RePEc:eee:lauspo:v:63:y:2017:i:c:p:584-591
    DOI: 10.1016/j.landusepol.2015.06.004
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    References listed on IDEAS

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    1. Jeremy Bulow & Paul Klemperer, 2009. "Why Do Sellers (Usually) Prefer Auctions?," American Economic Review, American Economic Association, vol. 99(4), pages 1544-75, September.
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    Cited by:

    1. Leitner, Stephan & Wall, Friederike, 2022. "Micro-level dynamics in hidden action situations with limited information," Journal of Economic Behavior & Organization, Elsevier, vol. 204(C), pages 372-393.

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    More about this item

    Keywords

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    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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