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American Economic Journal: Applied Economics: Vol. 5 No. 3 (July 2013)

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Private Information and the Allocation of Land Use Subsidies in Malawi

Article Citation

Jack, B Kelsey. 2013. "Private Information and the Allocation of Land Use Subsidies in Malawi." American Economic Journal: Applied Economics, 5(3): 113-35.

DOI: 10.1257/app.5.3.113

Abstract

Efficient targeting of public programs is difficult when the cost or benefit to potential recipients is private information. This study illustrates the potential of self-selection to improve allocational outcomes in the context of a program that subsidizes tree planting in Malawi. Landholders who received a tree planting contract as a result of bidding in an auction kept significantly more trees alive over a three year period than did landholders who received the contract through a lottery. The gains from targeting on private information through the auction represent a 30 percent cost savings per surviving tree for the implementing organization.

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Authors

Jack, B. Kelsey (Tufts U)

JEL Classifications

D04: Microeconomic Policy: Formulation; Implementation; Evaluation
D44: Auctions
D82: Asymmetric and Private Information; Mechanism Design
O13: Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
Q24: Renewable Resources and Conservation: Land
Q28: Renewable Resources and Conservation: Government Policy

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