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Conservation tenders: linking theory and experiments for policy assessment *
Author(s) -
Schilizzi Steven,
LataczLohmann Uwe
Publication year - 2013
Publication title -
australian journal of agricultural and resource economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.683
H-Index - 49
eISSN - 1467-8489
pISSN - 1364-985X
DOI - 10.1111/j.1467-8489.2012.00602.x
Subject(s) - call for bids , procurement , common value auction , microeconomics , budget constraint , economics , reverse auction , norm (philosophy) , information asymmetry , econometrics , complete information , computer science , operations research , public economics , mathematics , management , political science , law
Auction theory has mostly focussed on target‐constrained auctions and is less well developed for budget‐constrained tenders, which are the norm in environmental policy. This study assesses a theoretical model developed for budget‐constrained tenders in its capacity to predict tendering performance under information deficiencies typical of field applications. If complemented by laboratory experiments, the model is able to make the correct policy recommendation when comparing the tender to an equivalent fixed‐price scheme, even with poor predictive accuracy. This holds even if the policymaker has only limited information on the model’s key input variables.