Abstract

This study compares the fiscal efficiency of two types of reverse auctions, uniform-price and discriminatory-price, for the purchase of ecosystem services (PES) under different structures of information. Public agencies that conduct reverse PES auctions traditionally provide public information such as the budget and the accepted bids in past rounds. The experimental results from 180 participants suggest that providing varying levels of public information affects both seller behavior and auction efficiency, as measured by the limitation of rents. In this controlled setting, the most efficient auction is found to be a discriminatory-price auction with partial information. This auction produced efficiency gains of 7% of the experimental conservation budget and roughly 25% lower rents than the other auction-information treatments.