Imperfect Competition, Sequential Auctions, and Emissions Trading: An Experimental Evaluation

By Morten Soeberg

Abstract

This paper reports an experiment that studies the behavior of a monopolist on sequential auction markets for tradable permits. Using six sessions in a triple ABA crossover design, we investigate the cost effectiveness of permit allocations and the division of trade gains on sequential bid, offer, and double auction emission trading markets. We observe both cost-effectiveness as well as supra-competitive profits. The obtained results do not vary significantly across the three auction markets.