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The role of communication on an experimental market for tradable development rights

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  • Proeger, Till
  • Meub, Lukas
  • Bizer, Kilian

Abstract

Tradable development rights (TDR) are discussed as a means of containing urban sprawl in numerous countries. Introducing a novel experimental setting, we simulate a cap & trade TDR scheme and investigate the effects of communication, specifically among competing market participants and within teams of decision-makers. Communication reduces auction prices, leading to substantially less income redistribution from participants to the auctioneer. Nevertheless, no collusion is sustained. Team decision-making reduces overshooting prices and improves the system’s efficiency. We interpret these results as emphasizing the efficiency and political feasibility of TDR schemes for economic contexts in which communication among its participants can be assumed.

Suggested Citation

  • Proeger, Till & Meub, Lukas & Bizer, Kilian, 2017. "The role of communication on an experimental market for tradable development rights," Land Use Policy, Elsevier, vol. 68(C), pages 614-624.
    • Handle: RePEc:eee:lauspo:v:68:y:2017:i:c:p:614-624
    DOI: 10.1016/j.landusepol.2017.08.021
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    Cited by:

    1. Till Proeger & Lukas Meub & Kilian Bizer, 2018. "Laboratory Experiments of Tradable Development Rights: A Synthesis of Different Treatments," Sustainability, MDPI, vol. 10(6), pages 1-19, June.
    2. Henger, Ralph & Straub, Tim & Weinhardt, Christof, 2023. "Tradable planning permits in the field: Executive experimental results from Germany," Land Use Policy, Elsevier, vol. 127(C).
    3. Xin Janet Ge & Xiaoxia Liu, 2021. "Urban Land Use Efficiency under Resource-Based Economic Transformation—A Case Study of Shanxi Province," Land, MDPI, vol. 10(8), pages 1-20, August.
    4. Tikoudis, Ioannis & Farrow, Katherine & Mebiame, Rose Mba & Oueslati, Walid, 2022. "Beyond average population density: Measuring sprawl with density-allocation indicators," Land Use Policy, Elsevier, vol. 112(C).

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    More about this item

    Keywords

    Cap & trade; Collusion; Communication; Economic experiment; Land consumption; Tradable planning permits;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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