Collusion in Auctions for Emission Permits: An Experimental Analysis

Dallas Burtraw, Jacob Goeree, Charles Holt, Erica Myers, Karen Palmer and William Shobe

RFF Working Paper Series from Resources for the Future

Abstract: Environmental markets have several institutional features that provide a new context for the use of auctions and which have not been studied previously. This paper reports on laboratory experiments testing three auction forms -– uniform and discriminatory price sealed bid auctions and an ascending clock auction. We test the ability of subjects to tacitly or explicitly collude in order to maximize profits. Our main result is that the discriminatory and uniform price auctions produce greater revenues than the clock auction, both without and with explicit communication. The clock appears to be more subject to successful collusion because of its sequential structure and because it allows bidders to focus on one dimension of cooperation (quantity) rather than two (price and quantity).

Keywords: auctions; collusion; experiments; carbon dioxide; greenhouse gases (search for similar items in EconPapers)
JEL-codes: C92 D43 D44 (search for similar items in EconPapers)
Date: 2008-09-15
New Economics Papers: this item is included in nep-com, nep-env and nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Journal Article: Collusion in auctions for emission permits: An experimental analysis (2009)
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