The effect of initial lease periods on price discovery in laboratory tradable fishing allowance markets

Anderson, Christopher M.; Sutinen, Jon G.

doi:10.1016/j.jebo.2005.02.006

Cited by 18 publications

(12 citation statements)

References 49 publications

(23 reference statements)

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“…We framed the experiments as a production decision in which permits conveyed a right to produce one unit of a fictitious good to avoid introducing potential biases due to individual attitudes about the environment or emissions trading. Each session was organized into three separate but identical six-period stages, similar to the approach used by Anderson and Sutinen (2006) in their study of trading in fishery quota markets. This provided subjects with an opportunity to gain experience with the dynamic environment, adapt, and repeat.…”

Section: Experimental Designmentioning

confidence: 99%

An experimental analysis of compliance in dynamic emissions markets

Stranlund

Murphy

Spraggon

2011

Journal of Environmental Economics and Management

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Two important design elements for emission trading programs are whether and to what extent firms are able to bank emissions permits, and how these programs are to be enforced.In this paper we present results from laboratory emissions markets designed to investigate enforcement and compliance when these markets allow permit banking. Banking is motivated by a decrease in the aggregate permit supply in the middle of multi-period trading sessions.Consistent with theoretical insights, our experiments suggest that high permit violation penalties have little deterrence value in dynamic emissions markets, and that the main challenge of enforcing these programs is to motivate truthful self-reports of emissions.

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Section: Experimental Designmentioning

confidence: 99%

An experimental analysis of compliance in dynamic emissions markets

Stranlund

Murphy

Spraggon

2011

Journal of Environmental Economics and Management

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“…First, Anderson and Sutinen (2006) demonstrate that wide price variation occurs within multiple trading periods. Period-to-period speculation may cause this large variance, and this finding can be applied to the short-run price variation problems of quota markets in the real world.…”

Section: Convergence Of Quota Pricesmentioning

confidence: 93%

“…Price volatility is identified in several schemes, and the mitigation of price volatility is an important topic in the literature. Anderson and Sutinen (2006) show that the introduction of initial lease periods mitigates quota price instability through various mechanisms. Moreover, Anderson et al (2008) study the relationship between cost structures and the market share distribution among operators, and Moxnes (2012) compares the effectiveness of schemes between ITQs and auctioned seasonal quotas by using a laboratory experiment.…”

Section: Introductionmentioning

confidence: 99%

A laboratory assessment of the choice of vessel size under individual transferable quota regimes

Tanaka

Higashida

Managi

2014

Aus J Agri & Res Econ

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This paper examines the effect of individual transferable quota regimes on technology choice, such as choice of vessel size, by using the laboratory experiment method. We find that even if vessel sizes change over time, the quota price can converge to the fundamental value conditioned on the vessels chosen. We also find that subjects choose their vessel type to maximise their profits based on the quota trading prices in the previous period. This result implies that the efficiency of quota markets in the beginning period is important because any inefficiency in quota markets may affect vessel sizes in ensuing periods. Moreover, we find that the initial allocations may significantly influence vessel sizes through two channels: first, a higher initial allocation to a subject increases the likelihood that the subject invests in a largesized vessel; second, the quota price may be higher and more unstable under unequal allocation than under equal allocation; thus, whether the allocation is equal influences subjects' choice of vessel type.

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“…Interestingly, such an effect was not found in a study of imperfect enforcement and banking by Cason and Gangadharan (2006). Closest to our setup is an experimental study of tradable fishing allowance markets by Anderson and Sutinen (2006). None of these papers, however, focus on the effect of permit fees on allocative efficiency as we do here.…”

Section: Introductionmentioning

confidence: 99%

“…The main change was that instead of having 15 periods, each game included four rounds of four periods each; i.e. a four-period game was repeated four times (following Anderson and Sutinen, 2006). Some parameters were also changed slightly.…”

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confidence: 99%

Fees and the Efficiency of Tradable Permit Systems: An Experimental Approach

Baldursson

Sturluson²

2009

SSRN Journal

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The paper presents the results of an economic experiment in which the effects of fees on allocative efficiency of tradable utilization permits (e.g. pollution permits) are explored. Laboratory subjects (university students) play the roles of firms whose generic product requires a specific input or permits. Scarcity is exogenously introduced by a fixed supply of tradable production permits. Three treatments are compared: A) no fee imposed; B) a fixed tax per permit; C) partial retraction of permits which are reissued by auction. We regard B and C as two ways of imposing fees. Our results indicate that, after controlling for deviation of permit prices from a prediction based on fundamentals, fees have an impact on distribution of permits.Interestingly, a fixed tax enhances efficiency compared to the case of no fees, while retraction and reallocation by auction reduces efficiency compared to both alternative treatments. Apparently, subjects' decision making is affected by the imposition of fees, but it matters how such costs are presented or framed.

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The effect of initial lease periods on price discovery in laboratory tradable fishing allowance markets

Cited by 18 publications

References 49 publications

An experimental analysis of compliance in dynamic emissions markets

An experimental analysis of compliance in dynamic emissions markets

A laboratory assessment of the choice of vessel size under individual transferable quota regimes

Fees and the Efficiency of Tradable Permit Systems: An Experimental Approach

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