Designing Cost Effective Auctions as Instruments to Reduce Nutrients Run-off from Agriculture into the Baltic Sea - An Experimental Study
This research studies the use of auctions for reducing leaching of phosphorus and nitrogen into the Baltic Sea. Auctions are introduced as a tool for creating environmental contracts in agriculture for the first time in Finland. A controlled laboratory experiment is used to analyze the effect of introducing a bundle mechanism in the auction. Landholders submit sealed bids on multiple parcels in a one shot reverse auction. Each parcel is assigned an environmental quality and varies in size. In one treatment landholders can offer bids on environmental contracts for their parcels individually. In the other treatment landholders are given the opportunity to bundle parcels of land together when submitting bids as well as submitting bids for individual parcels. The results suggest that the bundle mechanism increase environmental efficiency of the auction compared to the individual parcel auction. In the treatment with individual parcel bids environmental value significantly affects over half of landholders’ offers. The bundle treatment however shows sign of a cognitive bias where landholders use the hectare size to determine their offers.
|Date of creation:||2011|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.eaae.org|
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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.
- Cason, Timothy N. & Gangadharan, Lata & Duke, Charlotte, 2002.
"A Laboratory Study of Auctions for Reducing Non-Point Source Pollution,"
2002 Conference (46th), February 13-15, 2002, Canberra
174066, Australian Agricultural and Resource Economics Society.
- Cason, Timothy N. & Gangadharan, Lata & Duke, Charlotte, 2003. "A laboratory study of auctions for reducing non-point source pollution," Journal of Environmental Economics and Management, Elsevier, vol. 46(3), pages 446-471, November.
- Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
When requesting a correction, please mention this item's handle: RePEc:ags:eaae11:114401. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
If references are entirely missing, you can add them using this form.