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EPA's New Emissions Trading Mechanism: A Laboratory Evaluation

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. http://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
Related URLs:
URLURL TypeDescription
http://dx.doi.org/10.1006/jeem.1996.0010DOIArticle
http://resolver.caltech.edu/CaltechAUTHORS:20171107-164126678Related ItemWorking Paper
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
Funders:
Funding AgencyGrant Number
National Science FoundationUNSPECIFIED
Caltech Laboratory for Experimental Economics and Political ScienceUNSPECIFIED
Other Numbering System:
Other Numbering System NameOther Numbering System ID
Social Science Working Paper863
Record Number:CaltechAUTHORS:20140324-132453926
Persistent URL:http://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: Susan Vite
Deposited On:17 Apr 2014 19:11
Last Modified:08 Nov 2017 18:33

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