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Published March 1983 | public
Journal Article

Externalities and Corrective Policies in Experimental Markets

Abstract

This paper reports on the behaviour of simple, laboratory markets which have an externality. Experiences with these markets provide some help in answering two broad questions. (1) Do markets with externalities behave in accordance with the law of supply and demand? (2) How do the pollution tax, pollution standard, and pollution licenses compare as methods for correcting the externality?

Additional Information

© 1983 Published by Wiley on behalf of the Royal Economic Society. Reprinted in Recent Developments in Experimental Economics, vol. 2, no. 11, pp. 179-200, edited by J. D. Hey and G. Loomes. Edward Elgar Publishing Ltd, U.K., 1993. Reprinted in Experiments in Environmental Economics, Volumes I and II, edited by Jason F. Shogren (2006). Part of The International Library of Environmental Economics and Policy, overall general editors of the series, Tom Tietenberg and Kathy Segerson. The financial support of the National Science Foundation and the Caltech Program of Enterprise and Public Policy is gratefully acknowledged. The author would like to thank William Baumol for his comments and the research assistants on the project: Karen Close, James Hong, and Darwin Niekerk.

Additional details

Created:
August 19, 2023
Modified:
March 5, 2024