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Auction Mechanisms for Allocating Subsidies for Carbon Emissions Reduction: An Experimental Investigation

Haoran He, Yefeng Chen and First Name Last Name

RFF Working Paper Series from Resources for the Future

Abstract: One method to reduce greenhouse gas emissions is to subsidize emissions-reducing activities. The question is how to allocate such subsidies. Allocation through auctions is an emerging mechanism. In a controlled experimental market setting, we compare the effects of a variety of auction mechanisms for allocating subsidies for carbon emissions reduction in China. Besides the conventional auction mechanisms, we place particular focus on testing the actual performance of the auction mechanism proposed by Erik Maskin (2011). We find that, while the Maskin auction mechanism spends the most from a fixed subsidy budget and leads to the largest emissions reduction, its per-unit emissions reduction cost is higher than that of discriminatory and uniform-price auction mechanisms. Both the Maskin and uniform-price auctions outperform discriminatory auctions in price discovery. Furthermore, from the government’s perspective, the Maskin auctions exhibit the strongest improvement tendency with repeated auctions.

Keywords: auctions; subsidy allocation; carbon dioxide; greenhouse gases; emissions reduction (search for similar items in EconPapers)
JEL-codes: C91 C93 D64 (search for similar items in EconPapers)
Date: 2014-04-18
New Economics Papers: this item is included in nep-ene, nep-env, nep-exp, nep-reg and nep-tra
References: Add references at CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Auction mechanisms for allocating subsidies for carbon emissions reduction: an experimental investigation (2021) Downloads
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