Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/205133
Authors: 
Requate, Tilman
Camacho-Cuena, Eva
Ch'ng, Kean Siang
Waichman, Israel
Year of Publication: 
2019
Series/Report no.: 
KCG Working Paper No. 18
Abstract: 
We experimentally test the truth-telling mechanism proposed by Montero (2008) for eliciting firms' abatement costs. We compare this mechanism with two well-known alternative allocation mechanisms, free and costly allocation of permits at the Pigouvian price. Controlling for the number of firms and the firms' maximal emissions, we find that, in line with the theoretical predictions, firms over-report their maximal emissions under free allocation of permits and under-report these under costly allocation of permits. Under Montero's mechanism, by contrast, firms almost always report their maximal emissions truthfully. However, in terms of efficiency, the difference between Montero's mechanism and costly allocation disappears with industries including more than one firm.
Subjects: 
mechanism design
environmental policy
permit trading
auctions
experiment
JEL: 
C92
D44
L51
Q28
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.