Emission quota trade among the few: laboratory evidence of joint implementation among committed countries

Böhm, Peter; Carlén, Björn

doi:10.1016/s0928-7655(98)00033-5

Cited by 35 publications

(15 citation statements)

References 8 publications

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“…In Bohm (1997), subjects were recruited from the staff of the ministries of the environment of four different Scandinavian states. As it turns out, these professional subjects do not show any significant deviations in their decisions from that of students who played the same game in Bohm and Carle´n (1999). This confirms the findings of Burns (1985), who also compared the behavior of professional traders and students.…”

Section: On Permit Marketssupporting

confidence: 83%

“…They favor experimental designs in which subjects are not informed about the nature of the good they are trading or even about the fact that the experiment has something to do with environmental problems. Bohm (1997) and Bohm and Carle´n (1999) are an exception. In their experiments, subjects received information about climate change problems and the international trading programs for CO 2 emission permits.…”

Section: On Permit Marketsmentioning

confidence: 99%

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Experiments in Environmental Economics and Some Close Relatives

Sturm

Weimann

2006

J Economic Surveys

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It is not only the great number of papers written on environment economics that make it worth dealing with this special branch of experimental research, but the environmental problem in all its facets seems to serve as a catalyst for identifying some methodological problems of the experimental method. For this reason, we will not only try to give an overview of recent experiments in environmental economics but also add some thoughts on the methodological implications of this work. We identify three direct connecting factors for the experimental method and environmental economics. First, social dilemmas are, in many cases, at the core of environmental problems. Experiments are able to test theoretical hypotheses for individual behavior in such social dilemma situations. The second connecting factor comes from the field of applied experimental work and can be characterized as the testbedding of institutional arrangements for the solution of environmental problems. The last direct application of experimental methods to environmental economics concerns the individual evaluation of environmental resources.

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Section: On Permit Marketssupporting

confidence: 83%

Section: On Permit Marketsmentioning

confidence: 99%

Experiments in Environmental Economics and Some Close Relatives

Sturm

Weimann

2006

J Economic Surveys

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“…In order to test for market power effects, it was crucial that subjects who represented the dominant country would be confident in this role. These subjects were therefore selected amongst Ph.D. students in Economics who had proved their negotiation skills in earlier laboratory experiments, i.e., Bohm and Carlén (1999).…”

Section: Design Issuesmentioning

confidence: 99%

Market Power in International Carbon Emissions Trading: A Laboratory Test

Carlén

2003

The Energy Journal

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The MIT Joint Program on the Science and Policy of Global Change is an organization for research, independent policy analysis, and public education in global environmental change. It seeks to provide leadership in understanding scientific, economic, and ecological aspects of this difficult issue, and combining them into policy assessments that serve the needs of ongoing national and international discussions. To this end, the Program brings together an interdisciplinary group from two established research centers at MIT: the Center for Global Change Science (CGCS) and the Center for Energy and Environmental Policy Research (CEEPR). These two centers bridge many key areas of the needed intellectual work, and additional essential areas are covered by other MIT departments, by collaboration with the Ecosystems Center of the Marine Biology Laboratory (MBL) at Woods Hole, and by short-and long-term visitors to the Program. The Program involves sponsorship and active participation by industry, government, and non-profit organizations.To inform processes of policy development and implementation, climate change research needs to focus on improving the prediction of those variables that are most relevant to economic, social, and environmental effects. In turn, the greenhouse gas and atmospheric aerosol assumptions underlying climate analysis need to be related to the economic, technological, and political forces that drive emissions, and to the results of international agreements and mitigation. Further, assessments of possible societal and ecosystem impacts, and analysis of mitigation strategies, need to be based on realistic evaluation of the uncertainties of climate science.This report is one of a series intended to communicate research results and improve public understanding of climate issues, thereby contributing to informed debate about the climate issue, the uncertainties, and the economic and social implications of policy alternatives. Titles in the Report Series to date are listed on the inside back cover. Market Power in International Carbon Emissions Trading: A Laboratory TestBjörn Carlén † AbstractThe prospect that governments of one or a few large countries, or trading blocs, would engage in international greenhouse gas emissions trading has led several policy analysts to express concerns that trade would be influenced by market power. The experiment reported here mimics a case where twelve countries, one of which is a large buyer (the mirror-image of a large seller), trade carbon emissions on an emissions exchange (a double-auction market) and where traders have quite accurate information about the underlying net demand. The findings deviate from those of the standard version of market power effects in that trade volumes and prices converge on competitive levels.

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“…Existing studies also suggest that experimental results are not substantially different if, instead of university students, professionals with relevant real-world experience are used as subjects. Examples include King et al (1993) who studied the behavior of experimental asset markets with stock traders as subjects and Bohm and Carlen (1999) who studied negotiation in the laboratory using diplomats as subjects. 25 The methodology of testbedding mechanisms in the laboratory is hardly new, dating at least as far back as the study of Grether et al (1981) which experimentally verified inefficiencies in the existing airport landing slot allocation mechanism.…”

Section: Discussionmentioning

confidence: 99%

Contracting inside an organization: An experimental study

et al. 2007

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In this paper we propose and test a contracting mechanism, Multi-Contract Cost Sharing (MCCS), for use in the management of a sequence of projects. The mechanism is intended for situations where (1) the contractor knows more about the true costs of various projects than does the contracting agency (adverse selection), and (2) unobservable effort on the part of the contractor may lead to cost reductions (moral hazard). The proposed process is evaluated in an experimental environment that includes the essential economic features of the NASA process for the acquisition of Space Science Strategy missions. The environment is complex and the optimal mechanism is unknown. The design of the MCCS mechanism is based on the optimal contract for a simpler related environment. We compare the performance of the proposed process to theoretical benchmarks and to an implementation of the current NASA ‘cost cap’ procurement process. The data indicate that the proposed MCCS process generates significantly higher value per dollar spent than using cost caps, because it allocates resources more efficiently among projects and provides greater incentives to engage in cost-reducing innovations. Copyright Economic Science Association 2007Mechanism design, Cost sharing, Moral hazard, NASA,

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Emission quota trade among the few: laboratory evidence of joint implementation among committed countries

Cited by 35 publications

References 8 publications

Experiments in Environmental Economics and Some Close Relatives

Experiments in Environmental Economics and Some Close Relatives

Market Power in International Carbon Emissions Trading: A Laboratory Test

Contracting inside an organization: An experimental study

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