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Large-Country Effects in International Emissions Trading: A Laboratoty Test

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The Experiment mimics carbon emissions trade among twelve industrialized countries during the end of a five-year-long trading period when traders are likely to have nearly full information about the underlying net demand. Trade is assumed to be governed by so-called double-auction rules. The hypotheses are i) and ii) that larger countries would not be able to influence price levels to their advantage. The findings support the first hypothesis but are inconclusive regarding the second. although they illustrate that large country may not be able to sustain favorable prices.

Suggested Citation

  • Carlén, Björn, 1999. "Large-Country Effects in International Emissions Trading: A Laboratoty Test," Research Papers in Economics 1999:15, Stockholm University, Department of Economics.
    • Handle: RePEc:hhs:sunrpe:1999_0015
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    1. Ledyard, John O. & Szakaly-Moore, Kristin, 1994. "Designing organizations for trading pollution rights," Journal of Economic Behavior & Organization, Elsevier, vol. 25(2), pages 167-196, October.
    2. 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.
    3. Robert W. Hahn, 1984. "Market Power and Transferable Property Rights," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 99(4), pages 753-765.
    4. Smith, Vernon L. & Williams, Arlington W., 1982. "The effects of rent asymmetries in experimental auction markets," Journal of Economic Behavior & Organization, Elsevier, vol. 3(1), pages 99-116, March.
    5. Gjerstad, Steven & Dickhaut, John, 1998. "Price Formation in Double Auctions," Games and Economic Behavior, Elsevier, vol. 22(1), pages 1-29, January.
    6. 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.
    7. 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.
    8. Friedman, Daniel, 1991. "A simple testable model of double auction markets," Journal of Economic Behavior & Organization, Elsevier, vol. 15(1), pages 47-70, January.
    9. R. Andrew Muller & Stuart Mestelman & John Spraggon & Rob Godby, 1999. "Can auctions control market power in emissions trading markets," Department of Economics Working Papers 1999-12, McMaster University.
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    More about this item

    Keywords

    Carbon emission trading; Market Power; Experimental economics;
    All these keywords.

    JEL classification:

    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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