An Experimental Investigation of Repeated Auctions and Secondary Market Trading in Emissions Markets with Bankable Allowances

Abstract

We report data from laboratory emissions allowance markets in which allowances do not expire and can be banked between compliance periods. These periods consist of a sealed bid auction, trading, and then compliance. The markets consist of multiple sequential compliance periods. We observe (1) market prices reflect an expectation of future market prices, not underlying equilibrium; (2) allowance banking increases with uncertainty; and (3) the secondary market - not the auction - is the primary mechanism of overall market efficiency. Contrary to our hypotheses, we also find (4) no efficiency difference resulting from the use of a uniform price or discriminative price auction and (5) no price or efficiency differences resulting from differing bid reporting rules after the auctions.

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Document Details

Document Type
Technical Report
Publication Date
Jan 01, 2010
Accession Number
AD1108565

Entities

People

  • Daniel Houser
  • Karla Hoffman
  • Matthew Olson

Organizations

  • George Mason University
  • MITRE Corporation

Tags

Communities of Interest

  • Energy and Power Technologies

DTIC Thesaurus Topics

  • Acquisition
  • Climate Change
  • Corporations
  • Data Science
  • Dielectric Gases
  • Economics
  • Efficiency
  • Emission
  • Environment
  • Experimental Design
  • Fluids
  • Gases
  • Governments
  • Greenhouse Effect
  • Greenhouse Gases
  • Greenhouses
  • Observation
  • Operations Research
  • Statistical Tests
  • Surveys
  • Systems Engineering
  • United States

Fields of Study

  • Economics

Readers

  • Economics
  • Game Theory.