Market Power in Emissions Trading Markets Ruled by a Multiple Unit Double Auction: Further Experimental Evidence

Sturm, Bodo

doi:10.1007/s10640-007-9165-9

Cited by 13 publications

(3 citation statements)

References 13 publications

(31 reference statements)

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“…The experiments of Muller et al (2002) indicate that the latter happens in the SM case and that the DA is not a successful tool to prohibit the redistribution of gains from trade. This result is reproduced by Sturm (2005) in a similar DA emissions trading experiment with inexperienced subjects. If subjects are experienced, however, then MP erodes very quickly in most sessions, indicating that subjects' experience with the market institution and their individual capabilities to achieve MP play an important role in this context.…”

Section: Market Power (Mp)supporting

confidence: 59%

“…Future research, therefore, should clarify the open questions regarding the impact of design differences. The experimental investigation of MP in DA emission trading markets by Sturm (2005) can be seen as a first step in this direction. While market performance is unaffected by different information subjects receive about the market structure in this experiment, the erosion of MP is much stronger in the case of experienced subjects than inexperienced.…”

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: Market Power (Mp)supporting

confidence: 59%

Section: On Permit Marketsmentioning

confidence: 99%

Experiments in Environmental Economics and Some Close Relatives

Sturm

Weimann

2006

J Economic Surveys

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“…Sturn (2008) notes that whether market power actually constitutes a problem in an emission trading system has to be analyzed for each market separately. Market power is probably not one of the main issues in the EU ETS since the number of involved facilities is very large, but it may constitute a serious problem for future international emissions trading system within the framework of the Kyoto Protocol and for some regional emissions markets.…”

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confidence: 99%

Auctioning vs. Grandfathering in Cap-and-Trade Systems with Market Power and Incomplete Information

Álvarez

André

2013

SSRN Journal

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We compare auctioning and grandfathering as allocation mechanisms of emission permits when there is a secondary market with market power and the firms have private information. Based on real-life cases such as the EU ETS, we consider a multi-unit, multi-bid uniform auction, modelled as a Bayesian game of incomplete information. At the auction each firm anticipates his role in the secondary market, which affects the firms' valuation of the permits (that are not common across firms) as well as their bidding strategies and it precludes the auction from generating a cost-effective allocation of permits, as it would occur in simpler auction models. Auctioning tends to be more cost-effective than grandfathering when the firms' costs are asymmetric enough, especially if the follower has lower abatement costs than the leader and uncertainty about the marginal costs is large enough. If market power spills over the auction, the latter is always less cost-effective than grandfathering. One central policy implication is that the specific design of the auction turns out to be crucial for cost-effectiveness.The chances of the auction to outperform grandfathering require that the former is capable of diluting the market power that is present in the secondary market.JEL CODES: D44, Q58, L13.

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Designing a double auction mechanism for the re-allocation of emission permits

Sun

2018

Ann Oper Res

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Market Power in Emissions Trading Markets Ruled by a Multiple Unit Double Auction: Further Experimental Evidence

Abstract: Double Auction, Emissions trading, Experimental economics, Market power, C91, Q53, Q28,

Cited by 13 publications

References 13 publications

Experiments in Environmental Economics and Some Close Relatives

Experiments in Environmental Economics and Some Close Relatives

Auctioning vs. Grandfathering in Cap-and-Trade Systems with Market Power and Incomplete Information

Designing a double auction mechanism for the re-allocation of emission permits

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