The impact of information provision on agglomeration bonus performance: an experimental study on local networks

S. Banerjee, F.P. De Vries, N. Hanley, D.P. Van Soest

    Research output: Contribution to journalArticlepeer-review

    60 Citations (Scopus)

    Abstract

    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.
    Original languageEnglish
    Pages (from-to)1009-1029
    Number of pages21
    JournalAmerican Journal of Agricultural Economics
    Volume96
    Issue number4
    Early online date16 Jun 2014
    DOIs
    Publication statusPublished - Jul 2014

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