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An Experimental Study of Electronic Bulletin Board Trading for Emission Permits

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  • Cason, Timothy N
  • Gangadharan, Lata

Abstract

This paper reports a laboratory experiment that studies several features of a tradable emission permit program recently implemented in the Los Angeles area. The experiment focuses on the new Electronic Bulletin Board trading institution, in which firms publicly post proposed terms of trade. Potential trading partners can review this information online, and transactions are executed following bilateral negotiation. The experiment includes trading restrictions implemented in the regulations due to the geography of Los Angeles. We find that the bulletin board market performs well and that prices reflect market conditions as accurately as in the continuous double auction trading institution. Copyright 1998 by Kluwer Academic Publishers

Suggested Citation

  • Cason, Timothy N & Gangadharan, Lata, 1998. "An Experimental Study of Electronic Bulletin Board Trading for Emission Permits," Journal of Regulatory Economics, Springer, vol. 14(1), pages 55-73, July.
    • Handle: RePEc:kap:regeco:v:14:y:1998:i:1:p:55-73
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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. Elmar A. Janssen, 2014. "The Influence of Transparency on Investments in Climate Protecting - An Economic Experiment," Working Papers Dissertations 06, Paderborn University, Faculty of Business Administration and Economics.
    3. Hans‐Theo Normann & Roberto Ricciuti, 2009. "Laboratory Experiments For Economic Policy Making," Journal of Economic Surveys, Wiley Blackwell, vol. 23(3), pages 407-432, July.
    4. Piotr Nowak & Maciej Romaniuk, 2009. "Applying fuzzy parametersin pricing financial derivatives inspiredby the kyoto protocol," Operations Research and Decisions, Wroclaw University of Technology, Institute of Organization and Management, vol. 4, pages 77-91.
    5. Robert Godby, 2002. "Market Power in Laboratory Emission Permit Markets," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 23(3), pages 279-318, November.
    6. Ben-David, Shaul & Brookshire, David S. & Burness, Stuart & McKee, Michael & Schmidt, Christian, 1999. "Heterogeneity, Irreversible Production Choices, and Efficiency in Emission Permit Markets," Journal of Environmental Economics and Management, Elsevier, vol. 38(2), pages 176-194, September.
    7. Hizen, Y. & Saijo, T., 2000. "Designing GHG Emissions Trading Institutions in the Kyoto Protocol: an Experimental Approach," ISER Discussion Paper 0492, Institute of Social and Economic Research, Osaka University.
    8. Morten Søberg, 2000. "Imperfect competition, sequential auctions, and emissions trading: An experimental evaluation," Discussion Papers 280, Statistics Norway, Research Department.
    9. Tisdell, John G. & Grainger, Corinne, 2008. "An Experimental Economic Analysis of Carbon Trading Options for Australia," 2008 Conference, August 28-29, 2008, Nelson, New Zealand 96661, New Zealand Agricultural and Resource Economics Society.
    10. Parry, Ian & Fischer, Carolyn & Jawahar, Puja & Aguilar , Francisco, 2005. "Corporate Codes of Conduct: Is Common Environmental Content Feasible?," RFF Working Paper Series dp-05-09, Resources for the Future.
    11. Noussair, C.N. & van Soest, D.P., 2014. "Economic Experiments and Environmental Policy : A Review," Other publications TiSEM 5ccc4032-fc1e-453c-9a96-a, Tilburg University, School of Economics and Management.
    12. Larson, Donald F. & Parks, Paul, 1999. "Risks, lessons learned, and secondary markets for greenhouse gas reductions," Policy Research Working Paper Series 2090, The World Bank.
    13. Bodo Sturm & Joachim Weimann, 2006. "Experiments in Environmental Economics and Some Close Relatives," Journal of Economic Surveys, Wiley Blackwell, vol. 20(3), pages 419-457, July.
    14. Noussair, C.N. & van Soest, D.P., 2014. "Economic Experiments and Environmental Policy : A Review," Discussion Paper 2014-001, Tilburg University, Center for Economic Research.
    15. Duke, Charlotte & Gangadharan, Lata, 2005. "Regulation in Environmental Markets: What can we learn from Experiments to Reduce Salinity?," 2005 Conference (49th), February 9-11, 2005, Coff's Harbour, Australia 137857, Australian Agricultural and Resource Economics Society.
    16. Lata Gangadharan, 2004. "Analysis of prices in tradable emission markets: an empirical study of the regional clean air incentives market in Los Angeles," Applied Economics, Taylor & Francis Journals, vol. 36(14), pages 1569-1582.
    17. Jan Abrell & Johanna Cludius & Sascha Lehmann & Joachim Schleich & Regina Betz, 2022. "Corporate Emissions-Trading Behaviour During the First Decade of the EU ETS," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 83(1), pages 47-83, September.
    18. Piotr Nowak & Maciej Romaniuk, 2009. "Applying fuzzy parameters in pricing financial derivatives inspired by Kyoto Protocol," Operations Research and Decisions, Wroclaw University of Science and Technology, Faculty of Management, vol. 19(4), pages 77-91.
    19. Veronika Grimm & Lyuba Ilieva, 2013. "An experiment on emissions trading: the effect of different allocation mechanisms," Journal of Regulatory Economics, Springer, vol. 44(3), pages 308-338, December.
    20. Shaul Ben-David & David Brookshire & Stuart Burness & Michael McKee & Christian Schmidt, 2000. "Attitudes toward Risk and Compliance in Emission Permit Markets," Land Economics, University of Wisconsin Press, vol. 76(4), pages 590-600.
    21. Lisa R. Anderson & Sarah L. Stafford, 2000. "Choosing Winners and Losers in a Classroom Permit Trading Game," Southern Economic Journal, John Wiley & Sons, vol. 67(1), pages 212-219, July.
    22. Lisa R. Anderson & Sarah L. Stafford, 2000. "Choosing Winners and Losers in a Classroom Permit Trading Game," Southern Economic Journal, John Wiley & Sons, vol. 67(1), pages 212-219, July.
    23. 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.
    24. Lisa R. Anderson & Sarah L. Stafford, 2000. "Choosing Winners and Losers in a Classroom Permit Trading Game," Southern Economic Journal, Southern Economic Association, vol. 67(1), pages 212-219, July.

    More about this item

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law

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