Date of Award

Summer 8-18-2010

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Economics

First Advisor

James C. Cox

Second Advisor

H. Spencer Banzhaf

Third Advisor

Paul J. Ferraro

Fourth Advisor

Cary A. Deck

Fifth Advisor

Kurt E. Schnier

Abstract

The chapters of this dissertation explore related aspects of the procurement of conservation services from private landowners. In the first chapter, heuristic laboratory experiments reveal the impact of potential government regulation on strategic forces and efficiency properties in conservation procurement auctions. In the second chapter, data from past procurement auctions are analyzed to discover the existence and magnitude of premiums received by auction participants.

The first Chapter, “Procurement Auctions Under Regulatory Threat,” examines how strategic forces and efficiency properties are impacted in auctions for the procurement of environmental services when a threat of regulation is levied. Laboratory experiments examining different regulatory environments demonstrate that a threat of regulation will reduce the amount of public funds necessary to purchase a given level of environmental services. However, adverse selection costs and equity are negatively impacted by threat implementation.

The second Chapter, “Estimating Bid Inflation in Procurement of Environmental Services,” studies the size of premiums received by program participants in conservation programs. Predictions informed by economic literature and theory elicit the underlying value distribution for a unique dataset of procurement auctions. Average premiums for auction participants range from almost 50 percent to less than 1 percent across auction periods and institutions. The results demonstrate that both repetition and rule variation may improve the efficiency of procurement auctions. The auctions studied here are shown to yield efficiency improvements of more than 32 percent over standard fixed-payment schemes for service procurement.

Included in

Economics Commons

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