How should the location of undesirable land uses, such as toxic waste dumps or prisons, be determined. Citing Julian Simon, Herbert Inhaber suggests using a reverse auction, in which the Federal government offers to compensate local residents for living near the undesirable site.
the price would rise, every week or month. The rising price, as in the airline case, would create a constituency urging their elected leaders to bid now, before the county down the road or the adjacent state got all the money.
...Living in Las Vegas, not far from the proposed Yucca Mountain repository, I know that there are few in Nevada that welcome it with open arms. If there had been a reverse Dutch auction, there might be people in Nevada (or any other state with deserts, like New Mexico or Washington) who would want it to come there.
For Discussion. Suppose that the compensation is given to a local government. Would a public employee who rents his home be more likely to support bidding for the undesirable site than a private-sector worker who owns his own home?