Auction Experiments and Simulations of Milk Quota Exchanges

Bernhard Brümmer, Jens-Peter Loy and Till Requate ()

No 114377, 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland from European Association of Agricultural Economists

Abstract: Since 2000 Germany has introduced a fairly unique market mechanism to trade milk quotas between dairy farms. The two major features are: (1) a quasi auctioning system that produces excess demands which are covered by state reserves free of charge and (2) a price band that is used to exclude highest bids. For both features an experimental design is developed to study the impact in reference to a regular seller’s sealed bid double auction. Results show that both treatments lead to significant misallocations. These are due to the direct impact of regulations and due to an imperfect adjustment of bidding functions. The major goal of the market design to reduce quota prices is reached, however, at significant trade losses.

Keywords: Livestock; Production/Industries (search for similar items in EconPapers)
Pages: 11
Date: 2011
New Economics Papers: this item is included in nep-exp and nep-reg
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https://ageconsearch.umn.edu/record/114377/files/Loy_Jens-Peter%20_340.pdf (application/pdf)

Related works:
Working Paper: Auction Experiments and Simulations of Milk Quota Exchanges (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:eaae11:114377

DOI: 10.22004/ag.econ.114377

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