search query: @indexterm POWER / total: 583
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| Author: | Godby, R. |
| Title: | Market Power in Laboratory Emission Permit Markets |
| Journal: | Environmental and Resource Economics
2002 : NOV, VOL. 23:3, p. 279-318 |
| Index terms: | COSTS AUCTIONS MARKETS POWER VERTICAL INTEGRATION |
| Language: | eng |
| Abstract: | This paper employs experimental economic methods to examine the effect of market structure on the use of marketable emissions permits. Results indicate that in a market with one dominant firm and a number of fringe firms, strategic manipulation occurs repeatedly in the laboratory as predicted by market power models, undermining the allocative and dynamic efficiency benefits such markets offer. When firms compete in a downstream product market dominated by the same single firm, market efficiency can actually be reduced with the implementation of permit markets. Final market efficiencies reflect initial endowments and are influenced by competitive conditions elsewhere in the economy, indicating that policy-makers should carefully consider whether markets are appropriate in such circumstances. |
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