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| Author: | Stranlund, J.K. Murphy, J.J. Spraggon, J.M. |
| Title: | An experimental analysis of compliance in dynamic emissions markets |
| Journal: | Journal of Environmental Economics and Management
2011 : NOV, VOL 62:3 p. 414-429 |
| Index terms: | environmental economics trading |
| Freeterms: | emissions trading permit markets permit banking |
| Language: | eng |
| Abstract: | Two central design elements for emission trading programs are whether and how much firms are able to bank emissions permits, and how these programs should be enforced. In this paper we display results from laboratory emissions markets designed to inspect enforcement and compliance when these markets allow banking of permits. The motivation for banking rises from a decrease in the aggregate permit supply in the middle of multi-period trading sessions. Consistent with theoretical insights, our tests suggest that strict permit violation penalties have little deterrence value in dynamic emissions markets, and that the main challenge of enforcing these programs is to motivate honest self-reports of emissions. |
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