This paper reports a laboratory experiment that studies several features of a tradable emission permit program recently implemented in the Los Angeles area. The experiment focuses on the new Electronic Bulletin Board trading institution, in which firms publicly post proposed terms of trade. Potential trading partners can review this information online, and transactions are executed following bilateral negotiation. The experiment includes trading restrictions implemented in the regulations due to the geography of Los Angeles. We find that the bulletin board market performs well and that prices reflect market conditions as accurately as in the continuous double auction trading institution. 1 Financial support was provided by the Southern California Studies Center. We are grateful to seminar participants at the USC School of Urban and Regional Planning, Resources for the Future and Emory University, participants at the Public Choice Society/Economic Science Association conference, Jeffrey Nugent and an anonymous referee for valuable comments.
|Number of pages||19|
|Journal||Journal of Regulatory Economics|
|Publication status||Published - 1 Jan 1998|