Abstract
This study investigates the relative efficiency and performance of alternative designs for multi-attribute markets. We compare credit stacking and bundling of environmental offsets where heterogeneous landholders simultaneously supply multiple ecosystem services. Our theoretical framework demonstrates that pure bundling violates Tinbergen’s rule and generates an inefficient pooling equilibrium. Conversely, we prove that offering a menu of bundles can restore the first-best separating equilibrium. To empirically test these theoretical results, we implement a double-auction laboratory experiment across four institutional treatments: (i) independent markets (unbundled stacking), (ii) pure bundling, (iii) an optimally weighted menu of bundles, and (iv) a sub-optimally weighted menu. Across treatments, we vary production complementarity and specialisation levels (with two values per parameter) across three repeated rounds per session. We provide actionable insights, grounded in our theoretical results and behavioural data, to inform the design and implementation of emerging national and international multi-attribute environmental markets.