The impact of information provision on agglomeration bonus performance : an experimental study on local networks
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The agglomeration bonus is an incentive mechanism to induce adjacent landowners to spatially coordinate their land use for the delivery of ecosystem services from farmland. This paper uses laboratory experiments to explore the performance of the agglomeration bonus in achieving the socially optimal land management configuration in a local network environment where the information available to subjects varies and the strategic setting is unfavorable for efficient coordination. The experiments indicate that if subjects are informed about both their direct and indirect neighbors' actions, they are more likely to produce the socially optimal configuration. Thus effectiveness of the policy can be improved by implementing information dissemination exercises among landowners. However given the adverse strategic setting, increased game experience leads to coordination failure and optimal land choices only at the localized level independent of the information available to subjects. Thus success of the agglomeration bonus scheme on real landscapes will have to take account of the roles of both information and experience on participant behavior.
Banerjee , S , De Vries , F P , Hanley , N & Van Soest , D P 2014 , ' The impact of information provision on agglomeration bonus performance : an experimental study on local networks ' American Journal of Agricultural Economics , vol 96 , no. 4 , pp. 1009-1029 . DOI: 10.1093/ajae/aau048
American Journal of Agricultural Economics
© 2014. The Authors. Published by Oxford University Press on behalf of the Agricultural and Applied Economics Association. All rights reserved. This is a pre-copyedited, author-produced PDF of an article accepted for publication in American Journal of Agricultural Economics following peer review. The version of record The impact of information provision on agglomeration bonus performance: An experimental study on local networks Banerjee, S., De Vries, F. P., Hanley, N. & Van Soest, D. P. 1 Jul 2014 In : American Journal of Agricultural Economics. 96, 4, p. 1009-1029 is available online at: http://ajae.oxfordjournals.org/content/96/4/1009
This research was funded by the European Investment Bank (EIB) under the EIB-University Research Action Programme
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