 Auctions as a Means of Creating a Market for Public Goods from AgricultureUwe Latacz‐Lohmann and Carel P. C. M. Van der Hamsvoort Journal of Agricultural Economics, 1998, vol. 49, issue 3, 334-345 Abstract: The paper looks at the possibility of creating a market for environmental goods and services in the countryside by awarding conservation contracts to farmers on the basis of competitive bidding. Auctions have several theoretical advantages over alternative allocation mechanisms (such as standard‐rate payments) because they allow the participants to deal with informational asymmetries and the uncertainty about the value of the (non‐market) goods being traded. A formal model of bidding behaviour in ‘green auctions’ shows that bidding strategies are determined by the individual farmers' costs of implementing the conservation contracts and their beliefs about the maximum acceptable payment level, making the auction an imperfect cost revelation mechanism. Auctions can reduce the information rents accruing to farmers and can increase the cost‐effectiveness of public goods provision. Strategic bidding behaviour in multiple‐signup auctions as well as high transaction costs are potential sources of reduced efficiency. Date: 1998 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:jageco:v:49:y:1998:i:3:p:334-345 Ordering information: This journal article can be ordered from Access Statistics for this article Journal of Agricultural Economics is currently edited by David Harvey More articles in Journal of Agricultural Economics from Wiley Blackwell |
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