nep-exp New Economics Papers
on Experimental Economics
Issue of 2014‒10‒13
one paper chosen by

  1. Buying spatially-coordinated ecosystem services and biodiversity conservation on forest land: an experiment on the role of auction format and communication By Anna Bartczak; Warsaw Ecological Economics Center; Michal Krawczyk; Nick Hanley; Anne Stenger

  1. By: Anna Bartczak (Faculty of Economic Sciences - University of Warsaw; Warsaw Ecological Economics Center); Warsaw Ecological Economics Center; Michal Krawczyk (Faculty of Economic Sciences - University of Warsaw; Warsaw Ecological Economics Center); Nick Hanley (Department of Geography and Sustainable Development - University of St Andrews); Anne Stenger (Laboratoire d'Economie Forestière, INRA - AgroParisTech)
    Abstract: Procurement auctions are one of several policy tools available to incentivise the provision of ecosystem services and biodiversity conservation. Successful biodiversity conservation often requires a landscape-scale approach and the spatial coordination of participation, for example in the creation of wildlife corridors. In this paper, we use a laboratory experiment to explore two features of procurement auctions in a forest landscape—the pricing mechanism (uniform vs. discriminatory) and availability of communication (chat) between potential sellers. We modify the experimental design developed by Reeson et al. (2011) by introducing uncertainty (and hence heterogeneity) in the production value of forest sites as well as an automated, endogenous stopping rule. We find that discriminatory pricing yields to greater environmental benefits per government dollar spent, chiefly due to better coordination between owners of adjacent plots. Chat also facilitates such coordination but also seems to encourage collusion in sustaining high prices for the most environmentally attractive plots. These two effects offset each other, making chat neutral from the viewpoint of maximizing environmental effect per dollar spent.
    Keywords: conservation auctions, spatial coordination, chat in experiments, discriminatory and uniform auctions, biodiversity conservation, provision of ecosystem services
    JEL: C92 D44 Q23 Q57 Q58
    Date: 2014–11

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