Tell the truth or not? The Montero mechanism for emissions control at work

Tilman Requate, Eva Camacho-Cuena, Kean Siang Ch'ng and Israel Waichman ()
Authors registered in the RePEc Author Service: Eva Camacho Cuena ()

No 18, KCG Working Papers from Kiel Centre for Globalization (KCG)

Abstract: We experimentally test the truth-telling mechanism proposed by Montero (2008) for eliciting firms' abatement costs. We compare this mechanism with two well-known alternative allocation mechanisms, free and costly allocation of permits at the Pigouvian price. Controlling for the number of firms and the firms' maximal emissions, we find that, in line with the theoretical predictions, firms over-report their maximal emissions under free allocation of permits and under-report these under costly allocation of permits. Under Montero's mechanism, by contrast, firms almost always report their maximal emissions truthfully. However, in terms of efficiency, the difference between Montero's mechanism and costly allocation disappears with industries including more than one firm.

Keywords: mechanism design; environmental policy; permit trading; auctions; experiment (search for similar items in EconPapers)
JEL-codes: C92 D44 L51 Q28 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-bec, nep-des, nep-ene, nep-env and nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/205133/1/1679966790.pdf (application/pdf)

Related works:
Journal Article: Tell the truth or not? The montero mechanism for emissions control at work (2019)
Working Paper: Tell the truth or not? The Montero mechanism for emissions control at work (2018)
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: https://EconPapers.repec.org/RePEc:zbw:kcgwps:18

Access Statistics for this paper

More papers in KCG Working Papers from Kiel Centre for Globalization (KCG)
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().