Heterogeneity, irreversible production choices, and efficiency in emission permit markets
Journal Article
·
· Journal of Environmental Economics and Management
- Univ. of New Mexico, Albuquerque, NM (United States). Dept. of Economics
This paper investigates a class of market mechanisms for environmental regulation based on the Clean Air Act tradable discharge permit program. Laboratory market experiments capture some of the more salient institutional features and focus on issues of firm technological heterogeneity and irreversible investment regarding the operation of the permit market. Experimental results suggest that higher degrees of abatement cost heterogeneity may lead to reduced trade volume, while the implications of increased cost heterogeneity regarding price volatility are mixed. Finally, increased cost heterogeneity appears to result in decreased laboratory efficiency.
- Sponsoring Organization:
- Electric Power Research Inst., Palo Alto, CA (United States)
- OSTI ID:
- 687374
- Journal Information:
- Journal of Environmental Economics and Management, Journal Name: Journal of Environmental Economics and Management Journal Issue: 2 Vol. 38; ISSN 0095-0696; ISSN JEEMDI
- Country of Publication:
- United States
- Language:
- English
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