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Experimental analysis of a land assembly mechanism

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  • Chaturvedi, Rakesh
  • Kanjilal, Kiriti

Abstract

Market mechanisms for land assembly problems suffer from a holdout problem and coercive legal solutions like eminent domain introduce new inefficiencies. A new mechanism that is not fully market-based but attempts price discovery is proposed, experimentally studied and is shown to improve efficiency. The mechanism is fully specified by two parameters - a percentile value of the empirical distribution of ask-prices that serves as a trading threshold for the buyer and a quantum of penalty to be applied to landowners who bid relatively very high. In a 2 × 2 treatment, it is found that reducing the trading threshold and increasing the penalty improves the efficiency performance.

Suggested Citation

  • Chaturvedi, Rakesh & Kanjilal, Kiriti, 2021. "Experimental analysis of a land assembly mechanism," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 91(C).
    • Handle: RePEc:eee:soceco:v:91:y:2021:i:c:s2214804321000203
    DOI: 10.1016/j.socec.2021.101680
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    Cited by:

    1. Rakesh Chaturvedi & Ashish Kumar Pandey, 2024. "Double auction for trading perfect complements," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 26(1), February.
    2. Soumendu Sarkar, 2022. "Strategyproof and Budget Balanced Mechanisms for Assembly," Working papers 320, Centre for Development Economics, Delhi School of Economics.

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    More about this item

    Keywords

    Land assembly; Holdout; Experiments;
    All these keywords.

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • H13 - Public Economics - - Structure and Scope of Government - - - Economics of Eminent Domain; Expropriation; Nationalization
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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