The role of communication on an experimental market for tradable development rights

Till Proeger, Lukas Meub and Kilian Bizer

Land Use Policy, 2017, vol. 68, issue C, 614-624

Abstract: Tradable development rights (TDR) are discussed as a means of containing urban sprawl in numerous countries. Introducing a novel experimental setting, we simulate a cap & trade TDR scheme and investigate the effects of communication, specifically among competing market participants and within teams of decision-makers. Communication reduces auction prices, leading to substantially less income redistribution from participants to the auctioneer. Nevertheless, no collusion is sustained. Team decision-making reduces overshooting prices and improves the system’s efficiency. We interpret these results as emphasizing the efficiency and political feasibility of TDR schemes for economic contexts in which communication among its participants can be assumed.

Keywords: Cap & trade; Collusion; Communication; Economic experiment; Land consumption; Tradable planning permits (search for similar items in EconPapers)
JEL-codes: C91 C92 D8 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:lauspo:v:68:y:2017:i:c:p:614-624

DOI: 10.1016/j.landusepol.2017.08.021

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