In the frictionless world of theory without transaction costs, allowance trading offers the potential of billions of dollars in savings when compared to traditional command and control regulation. It is therefore not surprising that regulators have embraced this approach in recent years to...

This chapter summarizes a laboratory experiment comparing four different trading institutions, in a random values environment with four single unit buyers and four single unit sellers. This chapter also summarizes the main findings on efficiency: the continuous double auction (CDA) and...

This chapter focuses on identifying the marginal impact of price signaling, holding all other environmental and institutional factors constant. Although price signaling often increases transaction prices, this increase is very often temporary. Equilibrium behavior may be unaffected by...