Does the Varian Mechanism Work?--Emissions Trading as an Example
This paper investigates whether Varian's(1994) compensation mechanism can work in a laboratory. The results show that this mechanism does not work as in the theory. We found that the magnitude of penalties crucially affects subjects' behavior.
Volume (Year): 2 (2003)
Issue (Month): 2 (August)
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- Weimann, Joachim & Yang, Chun-Lei & Vogt, Carsten, 2000. "An experiment on sequential rent-seeking," Journal of Economic Behavior & Organization, Elsevier, vol. 41(4), pages 405-426, April.
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