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Spatial Coordination and Joint Bidding in Conservation Auctions

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  • Simanti Banerjee
  • Timothy N. Cason
  • Frans P. de Vries
  • Nick Hanley

Abstract

Spatial coordination of land use change is pivotal in agri-environmental policy to improve the delivery of environmental goods. This paper implements a laboratory experiment to study spatial coordination in a conservation auction. In addition to letting individual producers bid competitively against each other to supply environmental goods, we ask whether opportunities for joint bidding can enhance spatial coordination in the auction cost-effectively. Auction performance depends on the nature of incentives for individual bids; in particular, whether an agglomeration bonus is offered for individual bids. With an individual bonus in place, joint bidding gives no improvement in either environmental benefits procured or cost-effectiveness. Absent an individual bonus, joint bidding improves environmental performance but can decrease cost-effectiveness. Further, across both individual and joint bidding treatments, the average environmental benefits, degree of spatial coordination, and cost-effectiveness are greater, and amount of seller markups lower, with multiple-round bidding compared to single-round bidding.

Suggested Citation

  • 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.
    • Handle: RePEc:ucp:jaerec:doi:10.1086/714601
    DOI: 10.1086/714601
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    2. Zhaoyang Liu & Simanti Banerjee & Timothy N. Cason & Nick Hanley & Qi Liu & Jintao Xu & Andreas Kontoleon, 2024. "Spatially coordinated conservation auctions: A framed field experiment focusing on farmland wildlife conservation in China," American Journal of Agricultural Economics, John Wiley & Sons, vol. 106(4), pages 1354-1379, August.
    3. Pathak, Santosh & Wang, Hua & Adusumilli, Naveen C., 2021. "Quantifying the dynamics of agricultural conservation practices in the Delta region," 2021 Annual Meeting, August 1-3, Austin, Texas 313916, Agricultural and Applied Economics Association.
    4. Chi Nguyen & Uwe Latacz‐Lohmann & Nick Hanley, 2024. "Landscape‐level determinants of the performance of an agglomeration bonus in conservation auctions," Journal of Agricultural Economics, Wiley Blackwell, vol. 75(2), pages 592-616, June.
    5. Paul, Laura A. & McGranaghan, Christina & Siders, A.R. & Dineva, Polina K. & Palm-Forster, Leah H. & Messer, Kent D., 2024. "Addressing coordination problems in residential buyouts: Experimental evidence for managed retreat in the face of climate change-related threats," Journal of Economic Behavior & Organization, Elsevier, vol. 226(C).
    6. Anne Stenger & Jens Abildtrup & Géraldine Bocquého & Kene Boun My & Tuyen Tong Tiet, 2023. "The role of mandatory and voluntary joint bidding in promoting efficiency in conservation auction," Post-Print hal-04208245, HAL.

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