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Two Patterns of Price Dynamics were Observed in Greenhouse Gases Emissions Trading Experiment: An Application of Point Equilibrium

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  • Yoichi Hizen
  • Takao Kusakawa
  • Hidenori NiizawaAuthor-Name:
  • Tatsuyoshi Saijo

Abstract

This paper compares efficiencies of double auction and bilateral trading in GHG emission trading experiments with the addition of two rules, abatement irreversibility of GHG emissions and non-compliance penalty, to Hizen and Saijo (1998). Using a new concept of equilibrium, we found that (i) Results were grouped into two cases. In one case, excessive reductions occurred at the early stage of the experiment and efficiency was relatively low. In the other case, excessive reduction did not occur at the early stage of experiment and efficiency was relatively high. (ii) In both cases, efficiency of double auction was higher than that of bilateral trading. (iii) Emissions trading lowered emissions reduction costs. (iv) Excessive emissions reduction occurred in almost all the sessions.

Suggested Citation

  • Yoichi Hizen & Takao Kusakawa & Hidenori NiizawaAuthor-Name: & Tatsuyoshi Saijo, 2001. "Two Patterns of Price Dynamics were Observed in Greenhouse Gases Emissions Trading Experiment: An Application of Point Equilibrium," ISER Discussion Paper 0557, Institute of Social and Economic Research, Osaka University.
    • Handle: RePEc:dpr:wpaper:0557
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    1. 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.
    2. R. Andrew Muller & Stuart Mestelman, 1998. "What have we learned from emissions trading experiments?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 19(4-5), pages 225-238.
    3. Bohm, Peter & Carlen, Bjorn, 1999. "Emission quota trade among the few: laboratory evidence of joint implementation among committed countries," Resource and Energy Economics, Elsevier, vol. 21(1), pages 43-66, January.
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    1. 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.
    2. Kusakawa, Takao & 草川, 孝夫 & クサカワ, タカオ & Saijo, Tatsuyoshi & 西條, 辰義 & サイジョウ, タツヨシ, 2002. "Emissions Trading Experiments: Investment Uncertainty and Liability," Discussion Paper 87, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.

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