ABSTRACT

Professor Kai Erickson, in an article in the Harvard Business Review, ascribed the public concerns as "a deep and profound dread." The dread—of toxic and radioactive wastes, of nearby prisons and half-way houses for mental patients—is clearly common. The reverse Dutch auction is the only type that takes account of the undesirable feature of waste sites. If a poor county volunteered in the auction, they could anticipate a substantial bonus heading their way. It might be of the order of millions or tens of millions, depending on the wastes, the size of state, competition in the auction, and other factors. The Richard Stroup system is clearly a Dutch auction, since there is only one bidder. Once one firm raises its hand, the auction is over. People who cry "Not In My Back Yard (NIMBY)!" have some rationality behind them. They are telling someone that the cost, real or perceived, of a waste site in their vicinity is high to them.