Auction design and the market for sulfur dioxide emissions
Name
35721634.pdf
Size
1.98 MB
Format
Adobe PDF
Checksum (MD5)
ac1df34fc293b87868edfc74d4e22a64
Author(s)
Joskow, Paul L.
Schmalensee, Richard
Bailey, Elizabeth M.
Date Issued
1996
Publisher
MIT Center for Energy and Environmental Policy Research
Series/Report no.
MIT-CEEPR (Series) ; 96-007WP.
Abstract
Title IV of the Clean Air Act Amendments of 1990 created a market for electric utility emissions of sulfur dioxide (SO2). Recent papers have argued that flaws in the design of the auctions that are part of this market have adversely affected its performance. These papers incorrectly assume that trade can only occur at auctions, however. Our empirical analysis of the SO2 emissions market shows that the auctions have become a small part of a relatively efficient market and that the auction design problems that have attracted the most attention have had no effect on actual market prices.
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