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Can auctions control market power in emissions trading markets

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Author Info
R. Andrew Muller
Stuart Mestelman
John Spraggon
Rob Godby

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Abstract

Using eight sessions (twenty-four ten-period markets) in a double ABA cross-over design, we demonstrate clear evidence of market power in double-auction emission trading markets (agents who are not constrained to only buy or sell). Conventional theory predicts that in half of the market-power environments monopsony should emerge and in half monopoly should emerge. Market-power outcomes are frequently observed, most often in the form of price discrimination, and most effectively by monopsonists.

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File URL: http://socserv.socsci.mcmaster.ca/econ/rsrch/papers/archive/99-12.pdf
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Paper provided by McMaster University in its series Department of Economics Working Papers with number 1999-12.

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Length: 48 pages
Date of creation: Dec 1999
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Handle: RePEc:mcm:deptwp:1999-12

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This paper has been announced in the following NEP Reports: References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  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. [Downloadable!] (restricted)
  2. Stuart Mestelman & Andrew Muller, 1997. "Emissions Trading with Shares and Coupons when Control over Discharges is Uncertain," McMaster Experimental Economics Laboratory Publications 1997-01, McMaster University. [Downloadable!]
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  3. Jamie Brown-Kruse & Steven R Elliot & Rob Godby, 1995. "Strategic Manipulation of Pollution Permit Markets: An Experimental Approach," Department of Economics Working Papers 1995-03, McMaster University. [Downloadable!]
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  1. Morten Søberg, 2000. "Imperfect competition, sequential auctions, and emissions trading: An experimental evaluation," Discussion Papers 280, Research Department of Statistics Norway. [Downloadable!]
  2. Carlén, Björn, 1999. "Large-Country Effects in International Emissions Trading: A Laboratoty Test," Research Papers in Economics 1999:15, Stockholm University, Department of Economics.
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