Assigning pollution permits: are uniform auctions efficient?

Francisco Alvarez, Francisco André and Cristina Mazón

MPRA Paper from University Library of Munich, Germany

Abstract: We study the efficiency of the uniform auction as an allocation mechanism for emission permits among polluting firms. In our model, firms have private information about their abatement costs, which differ across firms and across units, and bidders' demands are linear. We show that there is a continuum of interior Bayesian-Nash equilibria, and only one is effcient, minimizing abatement costs. We find that the existence of many bidders is not a sufficient condition to guarantee an efficient equilibrium in the uniform auction. Additionally, bidders' types have to be uncorrelated.

Keywords: Emission permits; Uniform auction; Efficiency; Incomplete information Simultaneous games (search for similar items in EconPapers)
JEL-codes: D44 Q58 (search for similar items in EconPapers)
Date: 2016-07-26
New Economics Papers: this item is included in nep-cse, nep-ene, nep-env, nep-gth and nep-mic
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Related works:
Journal Article: Assigning pollution permits: are uniform auctions efficient? (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:72827

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