On the fundamental performance of a marketable permit system in a trader setting

Koji Kotani, Kenta Tanaka and Shunsuke Managi

No SDES-2014-2, Working Papers from Kochi University of Technology, School of Economics and Management

Abstract: A marketable permit system (MPS) has been suggested as solutions to environmental problems. Whereas properties of MPSs in non-trader settings are well-documented, little is explored about how MPSs perform in trader settings. We instituted two auctions of trader settings in MPS experiments: double auction (DA) and uniform price auction (UPA), and obtain the following results: UPAs are more efficient and generate more stable prices than DAs; UPAs induce subjects to more truthfully reveal information about abatement costs for emissions; and a considerable proportion of trades in DAs consist of speculation. Thus, UPAs work better than DAs in trader settings.

Keywords: Marketable permits; economic experiments; double auction; uniform price auction; trader settings (search for similar items in EconPapers)
Pages: 48 pages
Date: 2014-10, Revised 2014-10
New Economics Papers: this item is included in nep-env and nep-exp
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Published in SDE Series, October 2014, pages 1-48

Downloads: (external link)
http://www.souken.kochi-tech.ac.jp/seido/wp/SDES-2014-2.pdf First version, 2014 (application/pdf)

Related works:
Journal Article: Which performs better under trader settings, double auction or uniform price auction? (2019)
Working Paper: Which performs better under a trader setting, double auction or uniform price auction? (2015)
Working Paper: On fundamental performance of a marketable permits system in a trader setting: Double auction vs. uniform price auction (2012)
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