Abstract

As an alternative to the more traditional fixed-price schemes, governments can run auctions to purchase environmental services from private agents. Governments have so far chosen the discriminatory price (DP) over the uniform price (UP) format. Theoretical and experimental studies have concluded that the DP usually performs better than the UP in terms of cost-effectiveness. Using field data from two fishing vessel decommissioning auctions in Scotland, we find ambiguous results regarding relative DP and UP performances. A novel approach for estimating the underlying bidder costs shows that bid shading and cost heterogeneity can each determine relative auction performance. (JEL Q22, Q28)

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Additional Information

ISSN
1543-8325
Print ISSN
0023-7639
Pages
pp. 658-673
Launched on MUSE
2012-08-27
Open Access
No
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