Designing GHG emissions trading institutions in the Kyoto protocol: an experimental approach

Its protocol calls for Annex B counties to reduce their average greenhouse gas emissions over 2008-2012 to at least five percent below 1990 levels. It adopted a " Plan of Action. " Since no details were given at these COPs, we have to design the mechanisms. 3 3. Which Trading Rule? • Bilateral Trading Is it inefficient due to mismatching? Does the revelation of contracted prices improve its efficiency? • Auctions Double Auction Uniform Price Auction Matching Auction EPA Auction Serious problems in the EPA auction of SO 2 emissions trading : Cason (1995), Cason and Plott (1996) 4. As a first step, we check the performance of bilateral trading and the double auction. 4 5. Experimental Design • Common features No country names were announced to subjects Use realistic marginal abatement cost curves The Dual role property : every subject can be a buyer and a seller depending on the prices. Bohm (1997) 6 subjects in each session