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The US SO2 Auction

Research output: Working paperResearch

  • http://www.asb.dk/omos/institutter/departmentofeconomics/
An annual discriminative and revenue-neutral auction is linked to the new Acid Rain Program which allows electric utilities all over the US to trade SO2 emission permits. This innovative SO2 auction distributes 2% of the permits in circulation and takes place at the Chicago Board of Trade. Early results showed that the auction generated a clearing price signal lower than the market price. Now the auction price seems to be determined by the outside market price. Still, in the important starting phase, a non-discriminative auction design would probably have generated better price signals since potential downward biases in buyer bids are due to the specific discriminative feature of the EPA auction.
Original languageEnglish
Publication statusPublished - 1998

    Research areas

  • SO2 Auction, Acid Rain Program, EPA, Chicago Board of Trade, Electric utilities, Price signal, Transaction costs, Discriminative auction, Non-discriminative auction, HHÅ forskning

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