The role of communication on an experimental market for tradable development rights. (November 2017)

• Record Type: Journal Article
• Authors: Proeger, Till; Meub, Lukas; Bizer, Kilian
• Is Part Of: Land use policy. Volume 68(2017)
• Page Start: 614
• Page End: 624
• Publication Date: 2017-11
• Subjects: C91 -- C92 -- D8; Cap & trade -- Collusion -- Communication -- Economic experiment -- Land consumption -- Tradable planning permits; Land use -- Periodicals; Land use -- Government policy -- Periodicals; Sol, Utilisation du -- Périodiques; Sol, Utilisation du -- Politique gouvernementale -- Périodiques; Electronic journals; 333.7305
• DOI: 10.1016/j.landusepol.2017.08.021
• Languages: English
• ISSNs: 0264-8377

Abstract

Abstract: Tradable development rights (TDR) are discussed as a means of containing urban sprawl in numerous countries. Introducing a novel experimental setting, we simulate a cap & trade TDR scheme and investigate the effects of communication, specifically among competing market participants and within teams of decision-makers. Communication reduces auction prices, leading to substantially less income redistribution from participants to the auctioneer. Nevertheless, no collusion is sustained. Team decision-making reduces overshooting prices and improves the system's efficiency. We interpret these results as emphasizing the efficiency and political feasibility of TDR schemes for economic contexts in which communication among its participants can be assumed.