Experimental analysis of a land assembly mechanism

Rakesh Chaturvedi and Kiriti Kanjilal

Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), 2021, vol. 91, issue C

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.

Keywords: Land assembly; Holdout; Experiments (search for similar items in EconPapers)
JEL-codes: C9 D47 D82 H13 P48 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:soceco:v:91:y:2021:i:c:s2214804321000203

DOI: 10.1016/j.socec.2021.101680

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