Auction theory is used to analyze the potential benefits of auctions in allocating contracts for the provision of nonmarket goods in the countryside. A model of optimal bidding for conservation contracts is developed and applied to a hypothetical conservation program. Competitive bidding, compared to fixed-rate payments, can increase the cost effectiveness of conservation contracting significantly. The cost revelation mechanism inherent in the bidding process makes auctions a powerful means by which to reduce the problems of information asymmetry. Strategic bidding behavior, which may adversely affect the performance of sequential auctions, is difficult to address by means of auction design. Copyright 1997, Oxford University Press.

This paper explores farmers' prospective responses to the “greening” of the Common Agricultural Policy. The analysis is based on discrete choice experiments with 128 German farmers. Participants were asked to choose between a “greening” option with a given set of management prescriptions and an “opt‐out” alternative with a stipulated cut of the single direct payment. A binary logit model is used to identify the variables affecting the likelihood of “greening” being chosen. In addition, latent class estimations are carried out to group respondents into latent classes of “compliers” and “non‐compliers”. We find that farmers' choices are driven by “greening” policy attributes, personal and farm characteristics, and interactions between these two groups of variables. Farmers perceive “greening” as a costly constraint, but not all farmers are equally affected and not all “greening” provisions are regarded as equally demanding. Specialised arable farms on highly productive land and intensive dairy farms are most likely to opt out of “greening” and voluntarily forgo part of their single payment entitlements. The paper concludes with a set of recommendations for improving the design of a second‐best policy.

This paper explores farmers' willingness to adopt genetically modified (GM) oilseed rape prior to its commercial release and estimates the 'demand' for the new technology. The analysis is based upon choice experiments with 202 German arable farmers. A multinomial probit estimation reveals that GM attributes such as gross margin, expected liability from cross pollination, or flexibility in returning to conventional oilseed rape significantly affect the likelihood of adoption. Neighbouring farmers' attitudes towards GM cropping and a number of farmer and farm characteristics were also found to be significant determinants of prospective adoption. Demand simulations suggest that adoption rates are very sensitive to the profit difference between GM and non-GM rape varieties. A monopolistic seed price would substantially reduce demand for the new technology. A monopolistic seed supplier would reap between 45% and 80% of the GM rent, and the deadweight loss of the monopoly would range between 15% and 30% of that rent. The remaining rent for farmers may be too small to outweigh possible producer price discounts resulting from the costs of segregating GM and non-GM oilseed rape along the supply chain. Copyright (c) 2008 The Authors. Journal compilation (c) 2008 The Agricultural Economics Society.

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