Cason, Timothy N. and Plott, Charles R. (1996) EPA's New Emissions Trading Mechanism: A Laboratory Evaluation. Journal of Environmental Economics and Management, 30 (2). pp. 133-160. ISSN 0095-0696. doi:10.1006/jeem.1996.0010. https://resolver.caltech.edu/CaltechAUTHORS:20140324-132453926
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Abstract
The EPA has designed a new call auction institution for trading allowances to emit sulfur dioxide. This paper reports twelve laboratory markets that evaluate the performance of this new institution relative to the more commonly observed uniform price call auction. We find that the uniform price call auction (i) is more efficient, (ii) induces more truthful revelation of underlying values and costs, (iii) provides more accurate price information, and (iv) is more responsive to changes in underlying market conditions. Under the EPA auction rules both buyers and sellers misrepresent their true value of the emission permits, which biases market-clearing prices downward.
| Item Type: | Article | |||||||||
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| Alternate Title: | New Emissions Trading Mechanism: A Laboratory Evaluation | |||||||||
| Additional Information: | SSWP version: November 1993, Revised July 1994. Published version: Received 9 August 1994, Revised 20 October 1994, Available online 19 April 2002. Copyright © 1996 Academic Press. Financial support was provided by the National Science Foundation and the Caltech Laboratory for Experimental Economics and Political Science. Seema Arora provided valuable research assistance. Mark Van Boening, two anonymous referees, and seminar participants at Washington University, the 1993 Western Economic Association, the 1993 Economic Science Association, and the 1993 Southern Economic Association Conferences provided helpful comments on an earlier draft. | |||||||||
| Group: | Social Science Working Papers | |||||||||
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| Issue or Number: | 2 | |||||||||
| DOI: | 10.1006/jeem.1996.0010 | |||||||||
| Record Number: | CaltechAUTHORS:20140324-132453926 | |||||||||
| Persistent URL: | https://resolver.caltech.edu/CaltechAUTHORS:20140324-132453926 | |||||||||
| Official Citation: | Cason, Timothy N. and Plott, Charles R. EPA's New Emissions Trading Mechanism: A Laboratory Evaluation. Pasadena, CA: California Institute of Technology, 1994. Social Science Working Paper, 863. | |||||||||
| Usage Policy: | No commercial reproduction, distribution, display or performance rights in this work are provided. | |||||||||
| ID Code: | 44470 | |||||||||
| Collection: | CaltechAUTHORS | |||||||||
| Deposited By: | INVALID USER | |||||||||
| Deposited On: | 17 Apr 2014 19:11 | |||||||||
| Last Modified: | 10 Nov 2021 16:52 |
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