An Experimental Investigation of the Seller Incentives in the EPA's Emission Trading Auction

Timothy Cason

American Economic Review, 1995, vol. 85, issue 4, 905-22

Abstract: The Clean Air Act requires the EPA to conduct annual auctions of emission allowances. Under the discriminative auction rules, sellers with the lowest asking prices receive the highest bids. This paper studies an inverted version of this auction in which buyers face the same incentives as sellers in the EPA auction. Consistent with theoretical predictions, buyers bid above their valuation, auction outcomes are inefficient, and increasing the number of buyers increases bids. Buyers facing human opponents compete more aggressively than the risk-neutral prediction but bids do not differ systematically from this prediction when buyers face computerized Nash 'robots.' Copyright 1995 by American Economic Association.

Date: 1995
References: Add references at CitEc
Citations: View citations in EconPapers (104)

Downloads: (external link)
http://links.jstor.org/sici?sici=0002-8282%2819950 ... O%3B2-Y&origin=repec full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

Related works:
Working Paper: An Experimental Investigation of the Seller Incentives of EPA's Emission Trading Auction (1993)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aecrev:v:85:y:1995:i:4:p:905-22

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Review is currently edited by Esther Duflo

More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().