An Experimental Analysis of Auctioning Emissions Allowances under a Loose Cap

The direct sale of emissions allowances by auction is an emerging characteristic of cap-and-trade programs. This study is motivated by the observation that all of the major implementations of cap-and-trade regulations for the control of air pollution have started with a generous allocation of allowances relative to recent emissions history, a situation we refer to as a “loose cap.” Typically more stringent reductions are achieved in subsequent years of a program. We use an experimental setting to investigate the effects of a loose cap environment on a variety of auction types. We find all auction formats studied are efficient in allocating emissions allowances, but auction revenues tend to be lower relative to competitive benchmarks when the cap is loose. Regardless of whether the cap is tight or loose, the different auction formats tend to yield comparable revenues toward the end of a series of auctions. However, aggressive bidding behavior in initial discriminatory auctions yields higher revenues than in other auction formats, a difference that disappears as bidders learn to adjust their bids closer to the cutoff that separates winning and losing bids.auction, carbon dioxide, greenhouse gases, allowance trading, Regional Greenhouse Gas Initiative, RGGI, cap and trade

Collusion in Auctions for Emission Permits: An Experimental Analysis

Environmental markets have several institutional features that provide a new context for the use of auctions and which have not been studied previously. This paper reports on laboratory experiments testing three auction forms -– uniform and discriminatory price sealed bid auctions and an ascending clock auction. We test the ability of subjects to tacitly or explicitly collude in order to maximize profits. Our main result is that the discriminatory and uniform price auctions produce greater revenues than the clock auction, both without and with explicit communication. The clock appears to be more subject to successful collusion because of its sequential structure and because it allows bidders to focus on one dimension of cooperation (quantity) rather than two (price and quantity).auctions, collusion, experiments, carbon dioxide, greenhouse gases

Price Discovery in Emissions Permit Auctions

Auctions are increasingly being used to allocate emissions allowances (“permitsâ€) for cap and trade and common-pool resource management programs. These auctions create thick markets that can provide important information about changes in current market conditions. This paper reports a laboratory experiment in which half of the bidders experienced unannounced increases in their willingness to pay for permits. The focus is on the extent to which the predicted price increase due to the demand shift is reflected in sales prices under alternative auction formats. Price tracking is comparably good for uniform-price sealed-bid auctions and for multi-round clock auctions, with or without end-of-round information about excess demand. More price inertia is observed for “pay as bid†(discriminatory) auctions, especially for a continuous discriminatory format in which bids could be changed at will during a pre-specified time window, in part because “sniping†in the final moments blocked the full effect of the demand shock.auction, greenhouse gases, price discovery, cap and trade, emission allowances, laboratory experiment

An Experimental Analysis of Auctioning Emission Allowances Under a Loose Cap

The direct sale of emission allowances by auction is an emerging characteristic of cap-and-trade programs. This study is motivated by the observation that all of the major implementations of cap-and-trade regulations for the control of air pollution have started with a generous allocation of allowances relative to recent emissions history, a situation we refer to as a “loose cap.†Typically more stringent reductions are achieved in subsequent years of a program. We use an experimental setting to investigate the effects of a loose cap environment on a variety of auction types. We find that all auction formats studied are efficient in allocating emission allowances, but auction revenues tend to be lower relative to competitive benchmarks when the cap is loose. Regardless of whether the cap is tight or loose, the different auction formats tend to yield comparable revenues toward the end of a series of auctions. However, aggressive bidding behavior in initial discriminatory auctions yields higher revenues than in the other auction formats, a difference that disappears as bidders learn to adjust their bids closer to the cut-off that separates winning and losing bids.auction, carbon dioxide, greenhouse gases, allowance trading, Regional Greenhouse Gas Initiative, RGGI, cap and trade, Environmental Economics and Policy, Resource /Energy Economics and Policy,

Correlation Functions of Huge Operators in AdS3_3/CFT2_2: Domes, Doors and Book Pages

We describe solutions of asymptotically AdS$_3$ Einstein gravity that are sourced by the insertion of operators in the boundary CFT$_2$, whose dimension scales with the central charge of the theory. Previously, we found that the geometry corresponding to a black hole two-point function is simply related to an infinite covering of the Euclidean BTZ black hole. However, here we find that the geometry sourced by the presence of a third black hole operator turns out to be a Euclidean wormhole with two asymptotic boundaries. We construct this new geometry as a quotient of empty AdS$_3$ realized by domes and doors. The doors give access to the infinite covers that are needed to describe the insertion of the operators, while the domes describe the fundamental domains of the quotient on each cover. In particular, despite the standard fact that the Fefferman-Graham expansion is single-sided, the extended bulk geometry contains a wormhole that connects two asymptotic boundaries. We observe that the two-sided wormhole can be made single-sided by cutting off the wormhole and gluing on a "Lorentzian cap". In this way, the geometry gives the holographic description of a three-point function, up to phases. By rewriting the metric in terms of a Liouville field, we compute the on-shell action and find that the result matches with the Heavy-Heavy-Heavy three-point function predicted by the modular bootstrap. Finally, we describe the geometric transition between doors and defects, that is, when one or more dual operators describe a conical defect insertion, rather than a black hole insertion.Comment: 45 pages, 21 figure

Rotifera from Adirondack region, N.Y.

17 p. : ill. ; 24 cm.Includes bibliographical references

Holography and Correlation Functions of Huge Operators: Spacetime Bananas

We initiate the study of holographic correlators for operators whose dimension scales with the central charge of the CFT. Differently from light correlators or probes, the insertion of any such maximally heavy operator changes the AdS metric, so that the correlator itself is dual to a backreacted geometry with marked points at the Poincar\'e boundary. We illustrate this new physics for two-point functions. Whereas the bulk description of light or probe operators involves Witten diagrams or extremal surfaces in an AdS background, the maximally heavy two-point functions are described by nontrivial new geometries which we refer to as "spacetime bananas". As a universal example, we discuss the two-point function of maximally heavy scalar operators described by the Schwarzschild black hole in the bulk and we show that its onshell action reproduces the expected CFT result. This computation is nonstandard, and adding boundary terms to the action on the stretched horizon is crucial. Then, we verify the conformal Ward Identity from the holographic stress tensor and discuss important aspects of the Fefferman-Graham patch. Finally we study a Heavy-Heavy-Light-Light correlator by using geodesics propagating in the banana background. Our main motivation here is to set up the formalism to explore possible universal results for three- and higher-point functions of maximally heavy operators.Comment: 45 pages, 14 figure

Rotifera on Mount Desert Island.

26 p. : ill ; 24 cm.Includes bibliographical references (p. 26)

Rotifera on Mount Desert Island

12 p. ; 24 cm.Includes bibliographical references (p. 12)