Price Discovery in Emissions Permit Auctions
Auctions are increasingly being used to allocate emissions allowances (â€œpermitsâ€ ) for cap and trade and common-pool resource management programs. These auctions create thick markets that can provide important information about changes in current market conditions. This paper reports a laboratory experiment in which half of the bidders experienced unannounced increases in their willingness to pay for permits. The focus is on the extent to which the predicted price increase due to the demand shift is reflected in sales prices under alternative auction formats. Price tracking is comparably good for uniform-price sealed-bid auctions and for multi-round clock auctions, with or without end-of-round information about excess demand. More price inertia is observed for â€œpay as bidâ€ (discriminatory) auctions, especially for a continuous discriminatory format in which bids could be changed at will during a pre-specified time window, in part because â€œsnipingâ€ in the final moments blocked the full effect of the demand shock.
|Date of creation:||05 Apr 2010|
|Date of revision:|
|Contact details of provider:|| Postal: P.O. Box 400206|
Web page: http://www.coopercenter.org/econ
More information through EDIRC
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.:
- Ellerman,A. Denny & Joskow,Paul L. & Schmalensee,Richard & Montero,Juan-Pablo & Bailey,Elizabeth M., 2005.
"Markets for Clean Air,"
Cambridge University Press, number 9780521023894, September.
- Porter, David & Rassenti, Stephen & Shobe, William & Smith, Vernon & Winn, Abel, 2009. "The design, testing and implementation of Virginia's NOx allowance auction," Journal of Economic Behavior & Organization, Elsevier, vol. 69(2), pages 190-200, February.
- Dallas Burtraw & Jacob Goeree & Charles A. Holt & Erica Myers & Karen Palmer & William Shobe, 2009.
"Collusion in auctions for emission permits: An experimental analysis,"
Journal of Policy Analysis and Management,
John Wiley & Sons, Ltd., vol. 28(4), pages 672-691.
- Burtraw, Dallas & Goeree, Jacob & Holt, Charles A. & Myers, Erica & Palmer, Karen & Shobe, William, 2008. "Collusion in Auctions for Emission Permits: An Experimental Analysis," Discussion Papers dp-08-36, Resources For the Future.
- Charles A. Holt & William Shobe & Dallas Burtraw & Karen Palmer & Jacob K. Goeree, 2007. "Auction Design for Selling CO2 Emission Allowances Under the Regional Greenhouse Gas Initiative," Reports 2007-03, Center for Economic and Policy Studies.
When requesting a correction, please mention this item's handle: RePEc:vac:wpaper:wp10-01. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (William M. Shobe)
If references are entirely missing, you can add them using this form.