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Evaluating Conservation Auctions with Unknown Bidder Costs: The Scottish Fishing Vessel Decommissioning Program

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  • Steven Schilizzi
  • Uwe Latacz-Lohmann

Abstract

As an alternative to the more traditional fixed-price schemes, governments can run auctions to purchase environmental services from private agents. Governments have so far chosen the discriminatory price (DP) over the uniform price (UP) format. Theoretical and experimental studies have concluded that the DP usually performs better than the UP in terms of cost-effectiveness. Using field data from two fishing vessel decommissioning auctions in Scotland, we find ambiguous results regarding relative DP and UP performances. A novel approach for estimating the underlying bidder costs shows that bid shading and cost heterogeneity can each determine relative auction performance.

Suggested Citation

  • Steven Schilizzi & Uwe Latacz-Lohmann, 2012. "Evaluating Conservation Auctions with Unknown Bidder Costs: The Scottish Fishing Vessel Decommissioning Program," Land Economics, University of Wisconsin Press, vol. 88(4), pages 658-673.
    • Handle: RePEc:uwp:landec:v:88:y:2012:iv:1:p:658-673
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    References listed on IDEAS

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    1. Steven Schilizzi & Uwe Latacz-Lohmann, 2007. "Assessing the Performance of Conservation Auctions: An Experimental Study," Land Economics, University of Wisconsin Press, vol. 83(4), pages 497-515.
    2. Schilizzi, Steven & Latacz-Lohmann, Uwe, 2007. "Assessing the performance of conservation auctions: an experimental study," 2007 Conference (51st), February 13-16, 2007, Queenstown, New Zealand 10436, Australian Agricultural and Resource Economics Society.
    3. Stoneham, Gary & Chaudhri, Vivek & Ha, Arthur & Strappazzon, Loris, 2003. "Auctions for conservation contracts: an empirical examination of Victoria’s BushTender trial," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 47(4), pages 1-24.
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    Cited by:

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    2. Balmford, Ben & Collins, Joseph & Day, Brett & Lindsay, Luke & Peacock, James, 2023. "Pricing rules for PES auctions: Evidence from a natural experiment," Journal of Environmental Economics and Management, Elsevier, vol. 122(C).
    3. Star, Megan & Rolfe, John & Barbi, Emily, 2019. "Do outcome or input risks limit adoption of environmental projects: Rehabilitating gullies in Great Barrier Reef catchments," Ecological Economics, Elsevier, vol. 161(C), pages 73-82.
    4. Gregory Smith & Brett Day & Amy Binner, 2019. "Multiple-Purchaser Payments for Ecosystem Services: An Exploration Using Spatial Simulation Modelling," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(1), pages 421-447, September.
    5. 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.

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    More about this item

    JEL classification:

    • Q22 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Fishery
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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