Abstract

Conservation auctions are competitive tenders used to allocate conservation contracts to voluntary farmers. This study evaluates whether a buyer of environmental services should conduct many small-scale auctions or a single large-scale auction to allocate a given number of conservation contracts. To examine the impact of an auction’s scale on its performance, I rely on numerical predictions and results from a decontextualized online experiment with three treatments in which the number of bidders varies. The number of bidders per awarded contract remains constant across treatments to isolate the effect of the scale, rather than the effect of competition level. Findings show that cost-effectiveness tends to improve as the scale of the auction increases. However, no significant relationship is found between auction scale and either allocative efficiency or bidders’ rents.

Practical information