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Price Expectations and International Quota Trading: An Experimental Evaluation

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  • Morten Søberg

Abstract

This paper reports a preliminary experimental test of international quota trading on a market characterized by several dominant traders. Uncertain quota demand and supply imply true market-clearing prices that in general differ from an expected competitive quota price. However, in the experiment the expected price level emerges as a focal point on which the bulk of quota trade contracts are keyed. Thus, incomplete price discovery occurs. Copyright Kluwer Academic Publishers 2000

Suggested Citation

  • Morten Søberg, 2000. "Price Expectations and International Quota Trading: An Experimental Evaluation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 17(3), pages 259-277, November.
    • Handle: RePEc:kap:enreec:v:17:y:2000:i:3:p:259-277
    DOI: 10.1023/A:1026457110029
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    1. Jamison, Julian C. & Plott, Charles R., 1997. "Costly offers and the equilibration properties of the multiple unit double auction under conditions of unpredictable shifts of demand and supply," Journal of Economic Behavior & Organization, Elsevier, vol. 32(4), pages 591-612, April.
    2. Barrett, Scott, 1994. "Self-Enforcing International Environmental Agreements," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 878-894, Supplemen.
    3. Scott Barret, 1998. "On the Theory and Diplomacy of Environmental Treaty-Making," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 11(3), pages 317-333, April.
    4. Plott, Charles R. & Gray, Peter, 1990. "The multiple unit double auction," Journal of Economic Behavior & Organization, Elsevier, vol. 13(2), pages 245-258, March.
    5. Hoel, Michael, 2011. "Environmental R&D," Memorandum 12/2010, Oslo University, Department of Economics.
    6. Carraro, Carlo & Siniscalco, Domenico, 1992. "The international dimension of environmental policy," European Economic Review, Elsevier, vol. 36(2-3), pages 379-387, April.
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    Cited by:

    1. Bohm, Peter, 2003. "Experimental evaluations of policy instruments," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 1, chapter 10, pages 437-460, Elsevier.
    2. Klaassen, Ger & Nentjes, Andries & Smith, Mark, 2005. "Testing the theory of emissions trading: Experimental evidence on alternative mechanisms for global carbon trading," Ecological Economics, Elsevier, vol. 53(1), pages 47-58, April.
    3. Timothy Cason, 2003. "Buyer Liability and Voluntary Inspections in International Greenhouse Gas Emissions Trading: A Laboratory Study," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 25(1), pages 101-127, May.

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    Keywords

    experimental economics; tradable quotas;

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