An assessment of four popular auction mechanisms in the siting of NIMBY facilities: some experimental evidence

Abstract

The issue of locating locally unfriendly but socially beneficial facilities such as landfills and power stations is an important public policy concern in many countries. Local residents in the area where such facilities are to be located tend to exhibit strong opposition, no doubt due to the asymmetric distribution of the costs and benefits of such not-in-my-backyard (NIMBY) facilities. A potentially useful mechanism for the siting of such facilities is by compensation auctions, which attempt to incorporate the market mechanism into the decision making process. In such auctions, communities name the compensation they require to host such facilities, and the community demanding the least amou..