nep-res New Economics Papers
on Resource Economics
Issue of 2005‒02‒27
two papers chosen by
Maximo Rossi
Universidad de la República

  1. Dynamic Efficiency of Emission Trading Markets: An Experimental Study By Andreas Nicklisch; Leon Zucchini
  2. Economic and Environmental Co-benefits of Carbon Sequestration in Agricultural Soils: Retiring Agricultural Land in the Upper Mississippi River Basin By Feng, Hong-Li; Kurkalova, Lyubov; Kling, Catherine L.; Gassman, Philip W.

  1. By: Andreas Nicklisch; Leon Zucchini
    Abstract: This study investigates the dynamic efficiency of an emission regulation regime where companies competitively pay for emission licences. We embed the emission licence market in a Cournot model where the price of emission licences is subject to strategic tradeoff between licences and abatement technologies. Unlike the standard Cournot model, agents have two action parameters, quantities bought on the licence market and investments into abatement technology. We want to investigate the implications of this market design on the strategic behavior regarding companies' incentives to invest in those technologies. Data from a series of laboratory experiments supports the theoretical predictions for subjects' investment into abatement technology. With respect to the adaptation process of individual quantities for licences we find that a majority of subjects adjusts on the market by imitation while a minority entertains a trial and error notion.
    Keywords: Cournot market, emission regulation, experimental economics, dynamic efficiency, learning
    JEL: Q52 Q53 Q55
    URL: http://d.repec.org/n?u=RePEc:esi:discus:2005-07&r=res
  2. By: Feng, Hong-Li; Kurkalova, Lyubov; Kling, Catherine L.; Gassman, Philip W.
    Abstract: This study investigates the carbon sequestration potential and co-benefits from policies aimed at retiring agricultural land in the Upper Mississippi River Basin, a large, heavily agricultural area. We extend the empirical measurement of co-benefits from the previous focus on environmental benefits to include economic transfers. These transfers have often been mentioned as a co-benefit, but little empirical work measuring the potential magnitude of these transfers has previously been undertaken. We compare and contrast five targeting schemes, each based on maximizing different physical environmental measures, including carbon sequestration, soil erosion, nitrogen runoff, nitrogen leaching, as well as the area enrolled in the program. In each case, the other environmental benefits and economic transfers are computed. We find that the geographic distribution of co-benefits (including economic transfers) varies significantly with the benefit targeted, implying that policy design related to targeting can have very important implications for both environmental conditions and income distributions in sub-regions.
    Date: 2005–02–22
    URL: http://d.repec.org/n?u=RePEc:isu:genres:12253&r=res

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