This paper uses laboratory experiments to investigate the effects of alternative solutions to a common-pool resource with a unidirectional flow. The focus is on the comparative economic efficiency of communications, bilateral “Coasian” bargaining, auctions and price-based allocations. All...

The proposed 2008 TARP auction was intended to facilitate rapid purchases by the U.S. department of Treasury of a wide array of mortgage-backed securities in order to remove these “toxic assets” from the portfolios of financially stressed banks. The Treasury had selected a Reference Price...

We experimentally study auctions versus grandfathering in the initial assignment of pollution permits that can be traded in a secondary spot market. Low and high emitters compete for permits in the auction, whereas permits are assigned for free under grandfathering. In theory, trading in the...