RT Journal Article
SR Electronic
T1 Quality information and market segmentation in auctions for reducing nonpoint source pollution
JF Land Economics
JO Land Econ
FD University of Wisconsin Press
SP le.102.4.060225-0044R1
DO 10.3368/le.102.4.060225-0044R1
A1 Ito, Nobuyuki
YR 2026
UL http://le.uwpress.org/content/early/2026/04/06/le.102.4.060225-0044R1.abstract
AB Auctions have the potential to improve the cost-effectiveness of nonpoint source pollution abatement to which applying the polluter pays principle is difficult. Laboratory experiments have shown that revealing the environmental impacts of reducing polluting inputs to nonpoint sources (potential sellers) leads to the deterioration of auction performance. The auction mechanism that simultaneously achieves cost-effectiveness and transparency for reducing nonpoint source pollution remains unclear. Through a laboratory experiment, I find that although the disclosure of information on environmental impacts deteriorates auction performance, contrary to theoretical predictions, market segmentation improves performance and cancels out these impacts.