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

We re-evaluate two experiments by Hizen and Saijo, unpublished manuscript, ISER, Osaka University (1999a) and Hizen and Saijo unpublished manuscript, ISER, Osaka University (1999b) to examine the performance of bilateral trading and double auction institutions in GHG emissions trading. It is found that: (i) the efficiency of both institutions is quite high, regardless of the disclosure or closure of contracted price and/or marginal abatement cost curve information; (ii) marginal abatement costs are equalized over time in both institutions; (iii) contracted prices roughly converge to the competitive price over time in a double auction, but not quite so in bilateral trading.