Imperfect Enforcement of Emissions Trading and Industry Welfare: A Laboratory Investigation

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dc.creatorStranlund, John K.
dc.creatorMurphy, James J.
dc.creatorSpraggon, John M.
dc.date2017-04-01T14:01:18Z
dc.date.accessioned2026-07-09T04:30:08Z
dc.descriptionThis paper uses laboratory experiments to investigate the performance of emission permit markets when compliance is imperfectly enforced. In particular we examine deviations in observed aggregate payoffs and expected penalties from those derived from a model of risk-neutral payoff-maximizing firms. We find that the experimental emissions markets were reasonably efficient at allocating individual emission control choices despite imperfect enforcement and significant noncompliance. However, violations and expected penalties were lower than predicted when these are predicted to be high, but were about the same as predicted values when these values were predicted to be low. Thus, although a standard model of compliance with emissions trading programs tends to predict significantly higher violations than we observe when subjects have strong incentives to violate their emissions permits, individual emissions control responsibilities are distributed among firms as predicted.
dc.identifierdoi:10.22004/ag.econ.42124
dc.identifierhttps://ageconsearch.umn.edu/record/42124/files/ResEcWorkingPaper2008-1.pdf
dc.identifierhttp://ageconsearch.umn.edu/record/42124
dc.identifier.urihttp://hdl.handle.net/123456789/550853
dc.languageeng
dc.publisher
dc.sourcehttp://ageconsearch.umn.edu/record/42124
dc.titleImperfect Enforcement of Emissions Trading and Industry Welfare: A Laboratory Investigation
dc.typeText

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