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A Virtual Field Trip to the Real World of Cap and Trade: Environmental Economics and the EPA SO 2 Allowance Auction


  • Lynne Y. Lewis


In the spring of 2001, Bates College Environmental Economics classes bought their first sulfur dioxide emissions allowance at U.S. Environmental Protection Agency's annual auction, then conducted by the Chicago Board of Trade. In the spring of 2010, they bought their 22nd through 34th allowances. This article describes a three-part method for teaching the theory and practice of tradable pollution allowances or cap and trade . Experiential learning allows for theoretical economic concepts to become engrained in a deeper way via hands-on experience. Assessment through student surveys suggests that students do solidify their knowledge of complex concepts such as discounting and efficient allowance prices with trading via this three-part technique.

Suggested Citation

  • Lynne Y. Lewis, 2011. "A Virtual Field Trip to the Real World of Cap and Trade: Environmental Economics and the EPA SO 2 Allowance Auction," The Journal of Economic Education, Taylor & Francis Journals, vol. 42(4), pages 354-365, October.
  • Handle: RePEc:taf:jeduce:v:42:y:2011:i:4:p:354-365
    DOI: 10.1080/00220485.2011.606086

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    Cited by:

    1. Lynne Y. Lewis, 2011. "Environmental and Natural Resource Economics: Teaching the Non-Major and Major Simultaneously," Chapters,in: International Handbook on Teaching and Learning Economics, chapter 46 Edward Elgar Publishing.

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