EconPapers    
Economics at your fingertips  
 

Price controls and banking in emissions trading: An experimental evaluation

John Stranlund (), James Murphy () and John Spraggon ()

Journal of Environmental Economics and Management, 2014, vol. 68, issue 1, 71-86

Abstract: We present results from laboratory emissions markets designed to investigate the effects of price controls and permit banking on limiting permit price risk. While both instruments reduce between-period price volatility and within-period price dispersion, combining price controls and permit banking yields important benefits. Banking alone produces high permit prices in earlier periods that fall over time, but the combined policy produces lower initial prices and lower volatility. However, banking, price controls, and the combination all produce higher between-period emissions volatility. Hence, for emissions markets that seek to control flow pollutants with strictly convex damages, efforts to limit permit price risk can result in higher expected damage.

Keywords: Emissions trading; Cap and trade; Laboratory experiments; Permit markets; Permit banking; Price controls; Price collars (search for similar items in EconPapers)
JEL-codes: C91 L51 Q58 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0095069614000205
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Price Controls and Banking in Emissions Trading: An Experimental Evaluation (2014) Downloads
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:eee:jeeman:v:68:y:2014:i:1:p:71-86

DOI: 10.1016/j.jeem.2014.04.002

Access Statistics for this article

Journal of Environmental Economics and Management is currently edited by M.A. Cole, A. Lange, D.J. Phaneuf, D. Popp, M.J. Roberts, M.D. Smith, C. Timmins, Q. Weninger and A.J. Yates

More articles in Journal of Environmental Economics and Management from Elsevier
Bibliographic data for series maintained by Nithya Sathishkumar ().

 
Page updated 2021-04-12
Handle: RePEc:eee:jeeman:v:68:y:2014:i:1:p:71-86