An experiment on emissions trading: the effect of different allocation mechanisms

In theory, efficiency and compliance levels induced by an emission trading system should not depend on the initial allocation mechanism for permits in the absence of transaction costs. In a laboratory experiment we investigate this prediction by comparing frequent and infrequent auctioning as well as two different grandfathering schemes under market rules that closely resemble those of the European Union Emission Trading System. Our experimental results suggest that, contrary to theoretical predictions, the initial allocation procedure has the potential to affect efficiency of the final permit allocation. While we do not identify an effect of the initial allocation procedure itself (auction vs. grandfathering), we observe higher final efficiency after infrequent auctioning of permits than for frequent auctioning. Surprisingly, for a grandfathering scheme that distributes permits proportional to expected needs the high initial efficiency is substantially reduced by secondary market trading. An analysis of behavioral patterns shows that permit prices and abatement levels are initially substantially higher if permits are allocated by auction and we also find more over-banking as compared to the grandfathering treatments. Treatment differences diminish in the course of the experiment.     

Cost Effectiveness Analyses Models in the Defence System in Republic Bulgaria

The thesis resulting from the research on the ＂costs-effects＂ relation is the principle of economic efficiency of defence capabilities. At first glance, the arguments in this direction are well-known and popular in crisis situations of various nature, including the current financial and economic crisis in the country, and the question about the cost of public welfare-security and defence is debatable. This cost is manifested through the defence capabilities of a country. In the new security environment, the compilation of a national defence strategy is a priority of the Defence Ministry, which has more and more limited resources. This means that they should be treated as an economic activity. An economic activity is considered as any purposeful activity, allocating and combining scarce resources among alternatives, making it possible to maximize the outcomes and minimize costs. The ratio between the costs and benefits of a given resource or combination of resources to achieve a pre-defined objective is pushed to the forefront and the rationalization of management decisions is based on it. This necessitates a cost effectiveness analysis, hence the evaluation of the outcomes （benefits） is manifested in the ＂cost-effect （benefit）＂ analysis. Defence as a product has the basic features of any commodity or service, i.e. it is designed for exchange, is useful, and meets certain needs. But due to the fact that it meets very specific needs （,preservation of the territorial integrity of the country and improving its national security）, it is distinguished by certain features which may be summarized as follows： collectivity of production and consumption of defence as a product necessary to the public, expressed by its consumption indivisibility; lack of market valuation of the price of defence as a product upon its consumption （as a monetary expression of its value）; the usefulness of defence as a product is reflected in its capacity to meet the system＇s needs for security and defence, which dete     

Entry and Merger in Commercial Fishing with Multiple Markets

Received May 23, 2001; revised version received October 22, 2001