how should we incentivize private landowners to produce more biodiversity globally much biodiversity is found on private land acting to conserve such biodiversity thus requires the design of policies which influence the decision making of farmers and foresters in this paper we outline the economic characteristics of this problem before reviewing a number of policy options such as conservation auctions and conservation easements we then discuss a number of policy design problems such as the need for spatial coordination and the choice between paying for outcomes rather than actions before summarizing what the evidence and theory developed to date tell us about those aspects of biodiversity policy design which need careful attention from policy makers and environmental regulators

do landowners respond to land retirement incentives evidence from the conservation reserve enhancement program previous research on incentive responsivness in voluntary land retirement programs has utilized either hypothetical contingent response methods or actual aggregate enrollment data both of which suffer from potential biases in this paper we analyze program participation in the binary choice setting of the conservation reserve enhancement program crep using data from six states our results suggest that landowners react positively to the incentives that are offered and that increases in one time incentives offered at the time of signup are a more cost effective means to increase enrollment than increases in the incentives offered on an annual basis

information effects in uniform price multi unit dutch auctions we design a multi unit descending price dutch auction mechanism that has applications for resource allocation and pricing problems we address specific auction design choices by theoretically and experimentally determining optimal information disclosure along two dimensions bidders are either informed of the number of bidders in the auction or know that it is one of two possible sizes they also either know the number of units remaining for sale or are unaware of how many units have been taken by other bidders we find that revealing group size decreases bids and therefore revenue if units remaining are not shown when group size is unknown the price also falls if the number of units remaining is revealed the most efficient and largest revenue outcome occurs when bidders are not provided information on either group size or units remaining these laboratory results conform to some directional predictions from our theory although overbidding is common

incentive based policy design for pollution control and biodiversity conservation a review this paper provides a succinct review of the main developments in the literature on incentive based policy mechanisms in the contexts of pollution control and biodiversity conservation dating from the early beginnings of the science in the 1960s a focal point in the review is on the design features of these policy mechanisms key developments in policy design were originally established in controlling externalities arising from pollution and have since been extended to policy design tailored towards biodiversity conservation special emphasis is given to the spatial characteristics of the environmental problems underlying both pollution control and biodiversity conservation the paper concludes by drawing some lessons and setting out elements of a future research agenda in both policy domains

the effects of market practices in oligopolistic markets an experimental examination of the ethyl case this study reports on the performance of experimental markets characterized by industrial structure and practices similar to those at issue in the ethyl case the central question is whether price competition is affected by the practices of advanced notification of price changes and most favored nation contracts or is determined by industrial organization and concentration alone

plata o plomo bribe and punishment in a theory of political influence we present a model where groups attempt to influence policies using both bribes plata spanish for silver and the threat of punishment plomo spanish for lead we then use it to make predictions about the quality of a country s public officials and to understand the role of institutions granting politicians with immunity from legal prosecution the use of punishment lowers the returns from public office and reduces the incentives of high ability citizens to enter public life cheaper plomo and more resources subject to official discretion are associated with more frequent corruption and less able politicians this predicts that violence in a country will typically go together with corruption and worse politicians moreover the possibility of punishment changes the nature of the influence game so that even cheaper plata can lower the ability of public officials protecting officials from accusations of corruption immunity will decrease the frequency of corruption if the judiciary is weak and may increase the quality of politicians these predictions cannot emerge from a traditional model where only bribes are used the positive evils and dangers of the representative as of every other form of government may be reduced to two heads first general ignorance and incapacity or to speak more moderately insufficient mental qualifications in the controlling body secondly the danger of its being under the influence of interests not identical with the general welfare of the community

dynamic entry reverse auctions and the purchase of environmental services this research uses economic experiments to examine the effectiveness of reverse auction institutions in an endogenous dynamic entry setting induced values are used to compare behavior in dynamic and static auction structures past research on this topic has understudied dynamic elements such as strategic entry and endogenous bidder selection that arise in a dynamic environment the results suggest complex behavioral patterns in which some sellers overenter early and others strategically wait this affects the owners abilities to extract rents in a dynamic setting this result impacts policy effectiveness because previous work overlooking these dynamic elements likely understates auction cost effectiveness

do political protests matter evidence from the tea party movement can protests cause political change or are they merely symptoms of underlying shifts in policy preferences this paper studies the effect of the tea party movement in the united states which rose to prominence through a series of rallies across the country on april 15 tax day 2009 to identify the causal effect of protests we use an instrumental variables approach that exploits variation in rainfall on the day of the coordinated rallies weather on tax day robustly predicts rally attendance and the subsequent local strength of the movement as measured by donations media coverage social networking activity and later events we show that larger rallies cause an increase in turnout in favor of the republicans in the 2010 congressional elections and increase the likelihood that incumbent democratic representatives retire incumbent policymaking is affected as well representatives respond to large protests in their district by voting more conservatively in congress finally the estimates imply significant multiplier effects for every protester republican votes increase by seven to fourteen votes together our results show that protests can build political movements that ultimately affect policy and they suggest that it is unlikely that these effects arise solely through the standard channel of private information revelation

uniform price reverse auction for estimating the costs of reducing open field burning of rice residue in nepal this paper describes the design implementation and results of a uniform price reverse auction and real payment system to incentivize the avoidance of open field burning of rice straw by smallholder farmers in nepal the main objective of the study was to reveal the private costs to farmers of avoiding rice straw burning the study used survey and auction data from a sample of 317 farmers from 18 villages in southern nepal using a sealed bid one shot reverse auction a level of payment was determined at which farmers would find acceptable to not engage in residue burning based on the bid amount 167 winner farmers were enrolled in a real payment programme the results revealed that 86 of the farmers complied with the programme to refrain from burning rice straw with an average payment of us 78 76 ha of paddy farm which represents us 13 17 ton of hbox co mathrm 2 eq of emissions to identify the policy variables linear and log linear regressions were fitted with the bid amount using socioeconomic variables land area farmer education practice of joint household decision making wage rate for farm labour and straw yield increased the bid amount the design and methods of field implementation of the reverse auction gave useful information for the advancement of conservation auctions and their replication in developing countries

when does public information undermine the efficiency of reverse auctions for the purchase of ecosystem services abstract government agencies that conduct reverse auctions related to the payment of ecosystem services pes traditionally provide a significant amount of public information about past auction results this information includes not only the amount of money spent by the government but also can include various information about the accepted bids this research uses induced value experiments to evaluate the effect of past auction information on seller landholder rent seeking results suggest that sellers use this public information and learn how to secure higher rents however when sellers are given information only about the buyer s government agency s budget they secure lower rents results also suggest that relative budget size affects rents and that budget stochastic variability in the presence of market information diminishes the effect thus in the presence of public information and equivalent total outlays variable budgets are more likely than stationary budgets to achieve auction fiscal efficiency the measure of whether the auction achieves the greatest pes benefits given its limited budget finally this research finds that auctions with greater heterogeneity in seller opportunity costs are likely to be less fiscally efficient than when the distribution is more homogeneous

conservation auctions should information about environmental benefits be made public most bid evaluation systems in conservation auctions consider both the proposed payment and the environmental attributes when auctioneers have a more comprehensive understanding of the conservation benefits than bidders do information becomes a central element of the auction design concealing information about conservation benefits may be the optimal strategy when entry decisions are not relevant however disclosing information may motivate landholders whose lands are associated with high environmental benefits to participate in an auction the present study demonstrates that revealing information about conservation benefits can be an optimal strategy if it enhances an auction s participation rate when bid acceptance rates are high copyright 2013 oxford university press

performance of the ambient tax does the nature of the damage matter the ambient tax is often considered as an efficient instrument to achieve a first best outcome of ambient pollution when the regulator cannot observe individual emissions or when monitoring costs are prohibitive while this view is supported to a large extent by experimental findings there remains several hurdles that hinder the implementation of the ambient tax in the field one of these hurdles is the nature of the damage experimental findings suggest that the efficiency of the ambient tax is higher under external damage i e if ambient pollution affects non polluters spraggon in j public econ 84 427 456 2002 than under internal damage i e if ambient pollution affects polluters themselves cochard et al in environ resour econ 30 393 422 2005 but this result rests on very different experimental settings therefore we designed a new experiment that allows to compare external and internal damage within a common setting our main finding is that the ambient tax is equally efficient under internal and external damage

assessing the performance of conservation auctions an experimental study this work uses controlled laboratory experiments to investigate the budgetary and the economic performance of competitive tenders for allocating conservation contracts to landholders experiments have been replicated in two different countries to check for robustness of results we find that auctions outperform the more traditional fixed price programs only in the one shot setting with repetition the auctions quickly lose their edge the budget constrained auction performs similarly to the target constrained in the one shot setting but appears more robust to repetition our results suggest that previous estimates of conservation auction performance are too optimistic and we propose a method for improving such estimates

organized crime and business subsidies where does the money go abstract business support policies are widespread in advanced countries to foster employment and productivity this paper analyses the role of organized crime in the allocation of public subsidies to businesses we assemble an innovative data set on the italian mafia at municipality level and test whether mafia ridden municipalities receive a disproportionally higher amount of funds we exploit exogenous variation at municipality level to instrument mafia activity and show that the presence of organized crime positively affects the probability of obtaining funding and the amount of public funds organized crime is also found to lead to episodes of corruption in the public administration sector a series of robustness checks confirms the above findings

incentivizing and tendering conservation contracts the trade off between participation and effort provision this paper uses lab experiments to investigate landholder responses to and the resulting outcome performance of programs that incentivize and tender conservation contracts assuming environmental outcome monitoring is costless we find that increasing the share of payment linked to uncertain environmental outcomes raises the level of individual stewardship effort but reduces participation thereby creating a trade off this leads to a second trade off environmental outcome is maximized at some intermediate level of contract incentivization but cost effectiveness at 100 tendering such contracts can yield additional benefits in terms of both environmental outcome and cost effectiveness however these benefits decline rapidly with rising incentivization

a laboratory study of auctions for reducing non point source pollution abstract non point source pollution such as nutrient runoff to waterways from agricultural production is an environmental problem that typically involves asymmetric information land use changes to reduce pollution incur opportunity costs that are privately known to landholders but these changes provide environmental benefits that may be more accurately estimated by regulators this paper reports a testbed laboratory experiment in which landholder sellers in sealed offer auctions compete to obtain part of a fixed budget allocated by the regulator to subsidize abatement in one treatment the regulator reveals to landholders the environmental benefits estimated for their projects and in another treatment the regulator conceals the potential projects environmental quality the results show that sellers offers misrepresent their costs more for high quality projects when quality is revealed so total abatement is lower and seller profits are higher when landholders know their projects environmental benefits this suggests that concealing this information may improve regulatory efficiency

breaking the cycle the effect of education on welfare receipt among children of welfare recipients abstract we examine the impact of high school graduation on the probability individuals from welfare backgrounds use welfare themselves our data consist of administrative educational records for grade 12 students in a canadian province linked with their own and their parents welfare records we address potential endogeneity problems by 1 controlling for ability using past test scores 2 using an instrument for graduation based on school principal fixed effects and 3 using a heckman singer type unobserved heterogeneity estimator graduation would reduce the probability of welfare receipt of drop outs by 1 2 to 3 4 effects are larger for individuals from troubled family backgrounds and low income neighbourhoods

wildlife corridor market design an experimental analysis of the impact of project selection criteria and bidding flexibility in this work we used controlled laboratory experiments to investigate the impact of project selection criteria and bidding flexibility on the economic performance of wildlife corridor auctions bidders coordinated their bids to form valid corridors and compete with other valid corridors to be successful we tested the impact of bidding flexibility in terms of a bidders differentiating their offers for different eligible corridors and b bidders submitting a single offer that would automatically be considered for all eligible corridors within the bidding options we compared the performance of the auctions under a net benefit and a benefit cost ratio selection criteria we found that participants conditioned their offers in terms of corridor benefit information as a consequence allowing multiple offers significantly increased payment and rent extraction on the other hand a single offer restriction facilitated a higher proportion of valid agreements and reduced rent extraction and as a result the agency s payment we could not find any significant difference between project selection criteria in terms of payment and rent extraction these results provide important insights for policy makers engaged in conservation market design throughout the world

a uniform price auction for conservation easements in the canadian prairies this paper describes the application of a uniform price auction with a hidden reserve price in a field project aimed at discovering canadian landowners willingness to accept compensation for placing conservation easements on their lands this is the only project of this kind in canada to date and one of the few worldwide the paper discusses the design of the auction describes its implementation and presents its results the bids received in the auction conformed with known factors affecting opportunity costs and willingness to accept the information from this auction was successful in guiding a long term easement procurement program

auctions with endogenous quantity this article studies auctions in which several sellers compete for the right to sell to a market characterized by a negatively sloped demand curve in this environment the quantity traded becomes endogenous this effect leads to three results concerning the outcomes of open versus first price sealed bid auctions first an open auction yields a higher expected price than does sealed bidding second and more important the open auction captures less of the potential gains from trade than does the sealed bid auction third for broad classes of demand curves the efficiency gains from switching to sealed bids from an open auction accrue to both sellers and the buyer so that all concerned parties would agree to the change a direct application of the theory is to procurement the heavy use of sealed bidding in procurement is seen as rational in light of these results auction models with endogenous quantity could be an alternative to price setting oligopoly models for the study of price formation in general for the latter impose strong information requirements on agents and yield only equilibrium price vectors not equilibrium processes for determining prices

conservation auctions and compliance theory and evidence from laboratory experiments many agri environmental conservation programs are faced with the problem of imperfect monitoring this provides farmers with an incentive for noncompliance because they can receive subsidies without implementing the conservation scheme in this paper bidding behavior and auction performance are compared for discriminatory price and uniform price auctions in an imperfect monitoring environment our theoretical analysis suggests that auction performances are equalized between the discriminatory price and uniform price auctions however laboratory experiments reveal that although the discriminatory price auction has an advantage in terms of reducing policy costs it is more likely to cause adverse selection as a result the uniform price auction tends to have higher efficiency and cost effectiveness when compliance behavior is taken into account

auctioning risky conservation contracts conservation auctions have the potential to increase the efficiency of payments to farmers to adopt conservation friendly management practices by fostering competition among them the literature considers bidders that have complete information about the costs of adoption and optimal bidding behavior reflects this information advantage farmers seek information rents and bids decrease when risk aversion increases because farmers are more averse to losing the auction we contribute to the literature by allowing for cost risk our paper shows that farmers must balance the risk of losing the auction thus foregoing information rent with the risk of submitting a bid that is not high enough to pay the costs of adopting conservation practices thus incurring losses we design an experiment to trade off these two risks and examine how risk aversion affects bidding behavior when participants face different sources and levels of risk our experiment contributes to a small literature on experimental auctions with risky product valuations we find that participants decrease their bids as risk aversion increases even in auctions with cost risk suggesting that the risk of losing the auction dominates these findings uncover new challenges for the practical implementation of conservation auctions as an efficient policy instrument

what do we learn from the weather the new climate economy literature a rapidly growing body of research applies panel methods to examine how temperature precipitation and windstorms influence economic outcomes these studies focus on changes in weather realizations over time within a given spatial area and demonstrate impacts on agricultural output industrial output labor productivity energy demand health conflict and economic growth among other outcomes by harnessing exogenous variation over time within a given spatial unit these studies help credibly identify i the breadth of channels linking weather and the economy ii heterogeneous treatment effects across different types of locations and iii nonlinear effects of weather variables this paper reviews the new literature with two purposes first we summarize recent work providing a guide to its methodologies datasets and findings second we consider applications of the new literature including insights for the damage function within models that seek to assess the potential economic effects of future climate change jel c51 d72 o13 q51 q54

a laboratory comparison of uniform and discriminative price auctions for reducing non point source pollution auctions allow regulators to identify land management changes with substantial environmental benefit and low opportunity cost this paper reports an experiment in which seller subjects compete in sealed offer auctions to obtain part of a fixed budget allocated by the experimenter regulator to subsidize pollution abatement one treatment employs uniform price auction rules whereas another treatment employs discriminative price auction rules we find that most offers in the uniform price auction are within 2 of cost whereas most offers in the discriminative price auction are at least 8 greater than cost nevertheless the discriminativeprice auction has superior overall market performance

organised crime institutions and political quality empirical evidence from italian municipalities this article assesses how legal institutions affect the influence of politically active criminal organisations on the human capital of elected politicians using data from over 1 500 southern italian municipalities in the period 1985 2011 it exploits municipal government dissolutions imposed by the national government for presumed mafia infiltration as a source of exogenous variation in the presence of politically active criminal organisations the results support theoretical predictions that the average education level of local politicians significantly increases when active mafia infiltration of local politics is remedied through the implementation of a stricter legal institutional framework

the monopoly of violence evidence from colombia many states in latin america africa and asia lack the monopoly of violence even though this was identified by max weber as the foundation of the state and thus the capacity to govern effectively in this paper we develop a new perspective on the establishment of the monopoly of violence we build a model to explain the incentive of central states to eliminate nonstate armed actors paramilitaries in a democracy the model is premised on the idea that paramilitaries may choose to and can influence elections since paramilitaries have preferences over policies this reduces the incentives of the politicians they favor to eliminate them we then investigate these ideas using data from colombia between 1991 and 2006 we first present regression and case study evidence supporting our postulate that paramilitary groups can have significant effects on elections for the legislature and the executive next we show that the evidence is also broadly consistent with the implication of the model that paramilitaries tend to persist to the extent that they deliver votes to candidates for the executive whose preferences are close to theirs and that this effect is larger in areas where the presidential candidate would have otherwise not done as well finally we use roll call votes to illustrate a possible quid pro quo between the executive and paramilitaries in colombia language en

too burdensome to bid transaction costs and pay for performance conservation in a world free of transaction costs reverse auctions can cost effectively allocate payment for environmental service contracts by targeting projects that provide the most benefit per dollar spent however auctions only succeed if enough farmers choose to bid so that the auctioneer can evaluate numerous projects for targeted funding a 2014 conservation auction to allocate payments for phosphorus reduction practices in nw ohio experienced very thin bidding according to a follow up survey auction participation was deterred by the complexity of the bidding process and the need to negotiate with renters due to low participation the actual conservation auction made payments for phosphorus reduction that were surprisingly costly at the margin applying a farmer behavioral model to the western lake erie basin we simulate participation choice and cost effectiveness of environmental outcomes in reverse auctions and uniform payment conservation programs results reveal that when perceived transaction costs of bid preparation are high reverse auctions are less cost effective than spatially targeted uniform payment programs that attract higher participation keywords reverse auctions transaction costs cost effective conservation programs endogenous participation

efficiency of experimental security markets with insider information an application of rational expectations models the study reports on the ability of competing models of market information integration and dissemination to explain the behavior of simple laboratory markets for a one priced security returns to the security depended upon a randomly drawn state of nature some agents insiders whose identity was unknown to other agents knew the state before the markets opened with replication of market conditions the predictions of a fully revealing rational expectations model are relatively accurate prices adjusted immediately to near rational expectations prices profits of insiders were virtually indistinguishable from non insiders and efficiency levels converged to near 100 percent

a science driven market based instrument for determining the cost of environmental services a comparison of two catchments in australia abstract an auction based approach or mbi for market based instrument was used to purchase environmental services from landowners and to establish a long term economic resource forest plantations in two catchments in the state of victoria australia the policy goal of the mbi was to encourage the conversion of cleared land to forest plantations it was desired to achieve this while also reducing the amount of land affected by dryland salinity with minimum impact on water available for irrigation operationally interested landowners identified areas on which they would be willing to establish forest plantations and stated the amount of money they would require from the government to undertake plantation establishment this constituted a landowner bid the proposed planting area associated with each bid was processed through a quantitative hydrological model to estimate off site impacts on dryland salinity and the change in water yield resulting from the conversion of individual non forested areas to forest plantations landowner bids were then accepted or not based on the economic trade offs among dollars requested by a landowner reduction in water yield and decrease in dryland salinity to enable a comparison of costs the mbi was independently trialled in two catchments for both the cost to government of a hectare of plantation and or a hectare of salinity benefit was calculated a number of ways assuming the existence of a calibrated hydrological model costs associated with distributing money via such an mbi were publicity fieldwork processing the bids through the model probity legal and administration in the gippsland catchment the total cost to establish forest plantations was 5340 per ha whereas it was 1635 per ha in the corangamite catchment no salinity benefit was obtained in gippsland but in corangamite if considered in isolation of the economic forest plantation benefit the cost per hectare of salinity benefit was 5020 operational aspects of the mbi are presented and discussed and a comparison is made to the expected costs of a conventional non science driven approach to landowner incentives

poor institutions rich mines resource curse in the origins of the sicilian mafia with weak law enforcement institutions a positive shock to the value of natural resources may increase demand for private protection and opportunities for rent appropriation through extortion favouring the emergence of mafia type organisations we test this hypothesis by investigating the emergence of the mafia in twentieth century sicily where a severe lack of state property rights enforcement coincided with a steep rise in international demand for sulphur sicily s most valuable export commodity using historical data on the early incidence of mafia activity and on the distribution of sulphur reserves we document that the mafia was more present in municipalities with greater sulphur availability

weak states causes and consequences of the sicilian mafia we document that the spread of the mafia in sicily at the end of the 19th century was in part caused by the rise of socialist peasant fasci organizations in an environment with weak state presence this socialist threat triggered landowners estate managers and local politicians to turn to the mafia to resist and combat peasant demands we show that the location of the peasant fasci is significantly affected by a severe drought in 1893 and using information on rainfall we estimate the impact of the peasant fasci on the location of the mafia in 1900 we provide extensive evidence that rainfall before and after this critical period has no effect on the spread of the mafia or various economic and political outcomes in the second part of the article we use this source of variation in the strength of the mafia in 1900 to estimate its medium term and long term effects we find significant and quantitatively large negative impacts of the mafia on literacy and various public goods in the 1910s and 20s we also show a sizable impact of the mafia on political competition which could be one of the channels via which it affected local economic outcomes we document negative effects of the mafia on longer term outcomes in the 1960s 70s and 80s as well but these are in general weaker and often only marginally significant one exception is its persistent and strong impact on political competition

do conservation auctions crowd out voluntary environmentally friendly activities research has shown that introducing external incentives to encourage pro social behavior such as monetary rewards or regulation may crowd out voluntary pro social activity this has implications for the appropriate design and use of such incentive based programs this study investigates motivational crowding out in the case of conservation auctions a relatively new tool that provides monetary incentives to encourage landowners to adopt environmentally friendly management practices our experimental evidence shows that the introduction and subsequent removal of a conservation auction significantly reduces voluntary provision of environmental quality via monetary donations to an environmental charity compared to a control group that does not experience an auction we also attempt to examine some economic theories of behavior that explain this effect according to either individual motivations or social interactions and our initial exploration finds that crowding out occurs regardless of whether or not participants have opportunities to interact with one another during the experiment

comparing regulations to protect the commons an experimental investigation in a laboratory experiment we test three regulations imposed on a common pool resource game with heterogeneous users an access fee and subsidy scheme transferable quotas and non transferable quotas we calibrate the game so that all regulations improve users profits compared to free access extraction we compare the regulations according to five criteria resource preservation individual profits profit difference pareto improvement from free access and sorting of the most efficient users one of the main findings is that even though it performs better in sorting out the most efficient subjects the fee and subsidy scheme is not more profitable than tradable quotas

information and auction performance a laboratory study of conservation auctions for spatially contiguous land management conservation auctions are used by public agencies to procure environmental friendly land uses from private landowners we present the structure of an iterative conservation auction that ranks bids according to a scoring rule intended to procure spatially adjacent conservation land use projects laboratory experiments are conducted to compare the performance of this auction under two information conditions under one condition subjects have knowledge about the spatial goal implemented by the scoring rule and in the other case they don t the results indicate that rent seeking is intensified with more information and increased bidder familiarity with the auction revealing the spatial information on the other hand has no impact on auction efficiency

adapting auctions for the provision of ecosystem services at the landscape scale abstract auctions or competitive tenders can overcome information asymmetries to efficiently allocate limited funding for ecosystem services most auctions focus on ecosystem services on individual properties to maximise the total amount provided however for many services it is not just the total quantity but their location in the landscape relative to other sites that matters for example biodiversity conservation may be much more effective if conserved sites are connected adapting auctions to address ecosystem services at the landscape scale requires an auction mechanism which can promote coordination while maintaining competition multi round auctions in which bidding is spread over a number of rounds with information provided between rounds on the location of other bids in the landscape offer an approach to cost effectively deliver landscape scale ecosystem services experimental economic testing shows these auctions deliver the most cost effective environmental outcomes when the number of rounds is unknown in advance which minimises rent seeking behaviour it also shows that a form of bid improvement rule facilitates coordination and reduces rent seeking where the biophysical science is well developed such auctions should be relatively straightforward to implement and participate in and have the potential to provide significantly better outcomes than standard one shot tenders