This report develops recommendations on the most appropriate design for auctions of Regional Greenhouse Gas Initiative (RGGI) CO2 allowances. The research was conducted in two phases. Phase 1 included the initial preparation of an annotated bibliography and a round of experiments to investigate the performance of a number of auction types considered to be likely candidates for use in a CO2 allowance auction. The main auction types considered were the sealed-bid, increasing-price sequential (English clock), and decreasing-price sequential (Dutch) auction forms. We also examined whether sealed-bid auctions should use the pay-as-bid (discriminatory) or uniform-price rules. Phase 2 experiments examined auction performance for expanded set of performance measures and in a richer institutional setting. The auction formats were compared with respect to price discovery, that is, ensuring that the price of allowances at auction reflects their market value, and in limiting collusive behavior. We also examined the effect of reserve prices and allowance banking and did more analysis of how the auction combines with secondary (or spot) markets. We looked at the effects of allowing participation in the auction by brokers or other traders not needing allowances for compliance and of combining auctions with “grandfathering” of some allowances for free to generators. In addition, we performed some experiments to look at so-called “hoarding behavior” and the effects of different mechanisms that have been proposed to limit hoarding. In particular, our experiments examined whether holding auctions with participation limited to generators can reduce the effect of hoarding behavior.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by Center for Economic and Policy Studies in its series Reports with number
2007-03.
Length: 131 pages Date of creation: 15 Oct 2007 Date of revision: Handle: RePEc:vac:report:rpt07-03
Note: Research conducted for the New York State Energy Research and Development Authority The additional file is an addendum to the report delivered in April 2008. Contact details of provider: Postal: 400206 Charlottesville VA 22904 Phone: +14349835376 Fax: +14349825524 Email: Web page: http://www.virginia.edu/ceps/ More information through EDIRC
For technical questions regarding this item, or to correct its listing, contact: (William M. Shobe).
Find related papers by JEL classification: Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy C9 - Mathematical and Quantitative Methods - - Design of Experiments C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
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.:
Cited by: (explanations, 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.)