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Thin and lumpy: an experimental investigation of water quality trading

Author

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  • Suter, Jordan F.
  • Spraggon, John M.
  • Poe, Gregory L.

Abstract

Water quality trading schemes in the United States can predominantly be characterized by low trading volumes. In this paper we utilize laboratory economics experiments to explore the extent to which the technology through which pollution abatement is achieved influences market outcomes. Mirroring the majority of water quality trading markets, the sessions utilize small trading groups composed of six participants. To understand the extent to which abatement technology influences trading behavior, the experimental treatments vary the degree of heterogeneity in initial abatement costs and the potential for long-lived investments in cost-reducing abatement technology.

Suggested Citation

  • Suter, Jordan F. & Spraggon, John M. & Poe, Gregory L., 2011. "Thin and lumpy: an experimental investigation of water quality trading," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 104023, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea11:104023
    DOI: 10.22004/ag.econ.104023
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    References listed on IDEAS

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    1. Morone, Andrea & Morone, Piergiuseppe, 2012. "Are small groups expected utility?," MPRA Paper 38198, University Library of Munich, Germany.
    2. Eva Camacho-Cuena & Till Requate & Israel Waichman, 2012. "Investment Incentives Under Emission Trading: An Experimental Study," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 53(2), pages 229-249, October.
    3. Marios Bisilkas & Aurora García-Gallego & Iván Barreda Tarrazona, 2012. "Services as an Alternative Path to Sustainability," Working Papers 2012/07, Economics Department, Universitat Jaume I, Castellón (Spain).
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    Cited by:

    1. Zhao, Tianli & Poe, Gregory L. & Boisvert, Richard N., 2015. "Management Areas and Fixed Costs in the Economics of Water Quality Trading," Working Papers 250017, Cornell University, Department of Applied Economics and Management.

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