Scandinavian Working Papers in Economics

Research Papers in Economics,
Stockholm University, Department of Economics

No 1999:15: Large-Country Effects in International Emissions Trading: A Laboratoty Test

Björn Carlén ()
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Björn Carlén: Dept. of Economics, Stockholm University, Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden

Abstract: The Experiment mimics carbon emissions trade among twelve industrialized countries during the end of a five-year-long trading period when traders are likely to have nearly full information about the underlying net demand. Trade is assumed to be governed by so-called double-auction rules. The hypotheses are i) and ii) that larger countries would not be able to influence price levels to their advantage. The findings support the first hypothesis but are inconclusive regarding the second. although they illustrate that large country may not be able to sustain favorable prices.

Keywords: Carbon emission trading; Market Power; Experimental economics

JEL-codes: Q28

39 pages, October 3, 1999

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