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Library Competition-Based Environmental Policy: An Analysis of Farmland Preservation in Maryland

Competition-Based Environmental Policy: An Analysis of Farmland Preservation in Maryland

Competition-Based Environmental Policy: An Analysis of Farmland Preservation in Maryland

Resource information

Date of publication
December 2007
Resource Language
ISBN / Resource ID
AGRIS:US2012203798

This paper studies bidder behavior in an innovative program in which farmers compete to sell their development rights to the State. We derive a reduced form bidding model that includes both private value and common value components. This model allows us to estimate the role of bidder competition, the winner’s curse correction, and the underlying distribution of private values. We find that competition reducelers adjust for a possible winner’s curse by increasing their bids by roughly 10 percent over their reservation values. Using the inferred reservation values, we compare this program to an alternative take-it-or-leave-it offer. We find that a take-it-or-leave-it offer of 50 percent of development values would have preserved more farmland for an equivalent budget than the current reverse auction setup.

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Authors and Publishers

Author(s), editor(s), contributor(s)

Horowitz, John K.
Lynch, Lori
Stocking, Andrew

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