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Competition-Based Environmental Policy: An Analysis of Farmland Preservation in Maryland

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  • John K. Horowitz
  • Lori Lynch
  • Andrew Stocking

Abstract

Policy makers have turned to competition- based voluntary-enrollment programs as a cost-effective way to achieve preferred land uses. This paper studies bidder behavior in an innovative auction-based program in which farmers compete to sell and retire the right to develop their land. We derive a reduced-form bidding model that includes private and common values. This model allows us to estimate the role of bidder competition, winner’s curse correction, and the underlying distribution of private values. We estimate that the auction enrolled as many as 3,000 acres (12%) more than a take-it or- leave-it offer would have enrolled for the same budgetary cost

Suggested Citation

  • John K. Horowitz & Lori Lynch & Andrew Stocking, 2009. "Competition-Based Environmental Policy: An Analysis of Farmland Preservation in Maryland," Land Economics, University of Wisconsin Press, vol. 85(4), pages 555-575.
  • Handle: RePEc:uwp:landec:v:85:y:2009:i:4:p:555-575
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    Citations

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    Cited by:

    1. Michael A. Arnold & Joshua M. Duke & Kent D. Messer, 2013. "Adverse Selection in Reverse Auctions for Ecosystem Services," Land Economics, University of Wisconsin Press, vol. 89(3), pages 387-412.
    2. Edmund M. Balsdon, 2012. "Property Value Capitalization and Municipal Open Space Referenda," Land Economics, University of Wisconsin Press, vol. 88(2), pages 201-232.
    3. Hellerstein, Daniel & Higgins, Nathaniel, 2010. "The Effective Use of Limited Information: Do Bid Maximums Reduce Procurement Cost in Asymmetric Auctions?," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 39(2), April.
    4. Rabotyagov, Sergey S. & Lin, Sonja, 2013. "Small forest landowner preferences for working forest conservation contract attributes: A case of Washington State, USA," Journal of Forest Economics, Elsevier, vol. 19(3), pages 307-330.
    5. repec:eee:jeeman:v:85:y:2017:i:c:p:130-145 is not listed on IDEAS
    6. Messer, Kent D. & Duke, Joshua M. & Lynch, Lori & Li, Tongzhe, 2017. "When Does Public Information Undermine the Efficiency of Reverse Auctions for the Purchase of Ecosystem Services?," Ecological Economics, Elsevier, vol. 134(C), pages 212-226.

    More about this item

    JEL classification:

    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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