Asymmetric information and international tradable quota treaties : an experimental evaluation
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- Discussion Papers 
This paper reports an experimental test of international quota trading on a market characterised by several dominant traders. Asymmetric information regarding quota demand and supply imply true market-clearing prices which differ from an expected competitive quota price. However, in the experiment the expected price level emerges as a focal point on which the bulk of quota trade contracts are keyed. Thus, incomplete price discovery obtains. Keywords: Asymmetric information, tradable quotas, experimental Economics.