Agglomeration Bonus in Local Networks: A laboratory examination of spatial coordination failure
Simanti Banerjee (),
Anthony M Kwasnica and
James Shortle ()
No 2011-18, Stirling Economics Discussion Papers from University of Stirling, Division of Economics
The Agglomeration Bonus (AB) - a subsidy mechanism can incentivize neighboring landowners to spatially coordinate their land use decisions for effective provision of ecosystem services such as biodiversity protection. In this paper we explore individual AB performance on a local network in a laboratory setting. In our experiments, we vary the local network size while keeping the number of neighbors for each player same. Results suggest better AB performance and greater spatial coordination in smaller groups relative to bigger ones. In bigger groups however we observe localized areas of coordinated land use choices which indicate partial AB effectiveness.
Keywords: Agglomeration Bonus; coordination failure; local networks; experiments (search for similar items in EconPapers)
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