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Information Access, Conservation Practice Choice, and Rent Seeking in Conservation Procurement Auctions: Evidence from a Laboratory Experiment

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  • Simanti Banerjee
  • Marc N Conte

Abstract

Existing research emphasizes the sensitivity of conservation auction performance and bidder behavior to auction design choices, as these auctions are not incentive compatible, meaning rent seeking must be controlled. Procuring agencies must decide how to provide bidders with information about the environmental quality of different conservation practices to manage the trade-off between an increased probability of selecting the optimal practice and increased rent-seeking behavior associated with this information. We use an induced-value laboratory experiment to explore how access to quality information and variation in the bid-submission protocol can best be combined to improve auction performance. We find that the auction performs best when a bid-menu format, in which participants submit bids for all their practices, is combined with information about the environmental quality rank of available conservation practices.

Suggested Citation

  • Simanti Banerjee & Marc N Conte, 2018. "Information Access, Conservation Practice Choice, and Rent Seeking in Conservation Procurement Auctions: Evidence from a Laboratory Experiment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 100(5), pages 1407-1426.
    • Handle: RePEc:oup:ajagec:v:100:y:2018:i:5:p:1407-1426.
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    File URL: http://hdl.handle.net/10.1093/ajae/aay064
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    Citations

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    Cited by:

    1. Marc N. Conte & Robert Griffin, 2019. "Private Benefits of Conservation and Procurement Auction Performance," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(3), pages 759-790, July.
    2. Pengfei Liu, 2021. "Balancing Cost Effectiveness and Incentive Properties in Conservation Auctions: Experimental Evidence from Three Multi-award Reverse Auction Mechanisms," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 78(3), pages 417-451, March.
    3. Nguyen, Chi & Latacz-Lohmann, Uwe, 2023. "Assessing the performance of agglomeration bonus in budget-constrained conservation auctions," 97th Annual Conference, March 27-29, 2023, Warwick University, Coventry, UK 334544, Agricultural Economics Society - AES.
    4. Simanti Banerjee & Timothy N. Cason & Frans P. de Vries & Nick Hanley, 2021. "Spatial Coordination and Joint Bidding in Conservation Auctions," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 8(5), pages 1013-1049.
    5. Harriet Toto Olita & Md. Sayed Iftekhar & Steven G. M. Schilizzi, 2023. "Optimizing contract allocation for risky conservation tenders," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 25(1), pages 63-85, January.

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