Strategic Behavior and the Environment > Vol 7 > Issue 1–2

The Effect of Information on Discriminatory-Price and Uniform-Price Reverse Auction Efficiency: An Experimental Economics Study of the Purchase of Ecosystem Services

Joshua M. Duke, University of Delaware, USA, messer@udel.edu Kent D. Messer, University of Delaware, USA, messer@udel.edu Lori Lynch, University of Maryland, USA, Tongzhe Li, University of Windsor, Canada,
 
Suggested Citation
Joshua M. Duke, Kent D. Messer, Lori Lynch and Tongzhe Li (2017), "The Effect of Information on Discriminatory-Price and Uniform-Price Reverse Auction Efficiency: An Experimental Economics Study of the Purchase of Ecosystem Services", Strategic Behavior and the Environment: Vol. 7: No. 1–2, pp 41-71. http://dx.doi.org/10.1561/102.00000073

Published: 06 Dec 2017
© 2017 J. M. Duke, K. D. Messer, L. Lynch and T. Li
 
Subjects
Public Economics: Public Finance,  Environmental Economics: Microeconomics,  Environmental Economics: Market-based Policy Instruments
 
Keywords
JEL Codes: C9Q24Q28D44
TendersAuction efficiencyLaboratory experimentsLand conservationEcosystem service markets
 

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In this article:
Literature Review
Methods
Results
Conclusion
Appendix A — Experiment Instructions (Discriminatory-Price, Full Information)
A1 Determination of Profits
A2 Market Information
Appendix B — Experiment Instructions (Uniform-Price, Full Information)
B1 Determination of Market Price
B2 Determination of Profits
B3 Market Information
References

Abstract

This study compares the fiscal efficiency of two types of reverse auctions, uniform-price and discriminatory-price, for the purchase of ecosystem services (PES) under different structures of information. Public agencies that conduct reverse PES auctions traditionally provide public information such as the budget and the accepted bids in past rounds. The experimental results from 180 participants suggest that providing varying levels of public information affects both seller behavior and auction efficiency, as measured by the limitation of rents. In this controlled setting, the most efficient auction is found to be a discriminatory-price auction with partial information. This auction produced efficiency gains of 7% of the experimental conservation budget and roughly 25% lower rents than the other auction-information treatments.

DOI:10.1561/102.00000073

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Strategic Behavior and the Environment, Volume 7, Issue 1-2 ICT-based Strategies for Environmental Conflicts: Articles Overiew
See the other articles that are also part of this special issue.