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Can Laboratory Experiments Help in Evaluating Emission Trading Schemes? A Pilot Experiment on Aviation Allowances: Lessons to Be Learned

  • Sabrina ArmenioEmail author
  • Angela Stefania Bergantino
  • Andrea Morone
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Abstract

The objective of this paper is to show the importance of incentivized laboratory experiments in the analysis of people’s propensity towards sustainability and in evaluating environmentally friendly investments. We discuss the application of a laboratory experiment to environmental regulation. In particular, we analyse the emission trading scheme (ETS) with reference to the aviation sector. In the laboratory, we test the propensity of firms to purchase permits to emit CO2 and to change their production technology. We consider a realistic framework by identifying a maximum limit of emissions established by the regulator, offering the opportunity to firms to change the initial (highly pollutant) technology. We first carry out a non-incentivized pilot experiment. Afterwards, we run an incentivized experiment. This paper shows that experiments are a valid policy support instrument, but their correct design is topical for its performance.

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Copyright information

© The Author(s) 2020

Authors and Affiliations

  • Sabrina Armenio
    • 1
    Email author
  • Angela Stefania Bergantino
    • 1
  • Andrea Morone
    • 1
  1. 1.Department of EconomicsManagement and Business Law, University of BariBariItaly

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