Testing%20the%20dynamic%20theory%20of%20emissions%20trading:%20experimental%20evidence%20for%20global%20carbon%20trading

1
Testing the dynamic theory of emissions trading
experimental evidence for global carbon trading
Ger Klaassen Andries Nentjes Mark Smith
Southampton, England 28-29 June 2001
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Dynamic Theory

• Montgomery (1972)
• Ermoliev et al. (2000)
• Energy infrastructures
• bilateral, sequential trading
• price formulation and implementation stage
• Walrasian auction
• two stages convergence

3
Objective and Structure

• Falsify the theory using experiments for carbon
  trading
• Literature, design, results

4
Existing Experiments

• SO2 trading USA
• Carbon trading (Bohm, Baron)
• We differ
• information on costs is private
• both bilateral and auctions
• 6 major industrialized countries

5
Design

• Common knowledge
• Private knowledge
• Trading schemes
• bilateral sequential
• single bid auction
• Walrasian auction (price calls)
• Kyoto agreement CEE, EU, Japan, Russia, Ukraine,
  USA