Economics at your fingertips  

Dynamic Efficiency in Experimental Emissions Trading Markets with Investment Uncertainty

Timothy Cason () and Frans P. Vries ()
Additional contact information
Frans P. Vries: University of Stirling Management School

Environmental & Resource Economics, 2019, vol. 73, issue 1, 1-31

Abstract: Abstract This study employs a laboratory experiment to assess the performance of tradable permit markets on dynamic efficiency arising from cost-reducing investment. The permit allocation rule is the main treatment variable, with permits being fully auctioned or grandfathered. The experimental results show significant investment under both allocation rules in the presence of ex ante uncertainty over the actual investment outcome. However, auctioning permits generally provides stronger incentives to invest in R&D, leading to greater dynamic efficiency compared to grandfathering.

Keywords: Pollution permits; Allowance auction; Grandfathering; Investment incentives; Stochastic R&D; Laboratory experiments (search for similar items in EconPapers)
JEL-codes: C91 D80 O31 Q55 Q58 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
Working Paper: Dynamic Efficiency in Experimental Emissions Trading Markets with Investment Uncertainty (2018) 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:

Ordering information: This journal article can be ordered from
http://www.springer. ... al/journal/10640/PS2

Access Statistics for this article

Environmental & Resource Economics is currently edited by Ian J. Bateman

More articles in Environmental & Resource Economics from Springer, European Association of Environmental and Resource Economists Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla ().

Page updated 2019-11-06
Handle: RePEc:kap:enreec:v:73:y:2019:i:1:d:10.1007_s10640-018-0247-7