The Impact of Information Provision on Agglomeration Bonus Performance: An Experimental Study on Local Networks

21 Pages Posted: 15 Apr 2020

See all articles by Simanti Banerjee

Simanti Banerjee

affiliation not provided to SSRN

Frans P. de Vries

affiliation not provided to SSRN

Nick Hanley

University of Stirling

Daan van Soest

Tilburg University - CentER & Department of Economics

Date Written: July 2014

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.

Suggested Citation

Banerjee, Simanti and de Vries, Frans P. and Hanley, Nick and van Soest, Daan P., The Impact of Information Provision on Agglomeration Bonus Performance: An Experimental Study on Local Networks (July 2014). American Journal of Agricultural Economics, Vol. 96, Issue 4, pp. 1009-1029, 2014, Available at SSRN: https://ssrn.com/abstract=3574202 or http://dx.doi.org/10.1093/ajae/aau048

Simanti Banerjee (Contact Author)

affiliation not provided to SSRN

Frans P. De Vries

affiliation not provided to SSRN ( email )

No Address Available

Nick Hanley

University of Stirling

Stirling, Scotland FK9 4LA
United Kingdom

Daan P. Van Soest

Tilburg University - CentER & Department of Economics ( email )

P.O. Box 90153
5000 LE Tilburg
Netherlands
+31 13 466 2072 (Phone)

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