Carbon Allowance Auction Design: An Evaluation of the Current Debate

Author(s): Giuseppe Lopomo and Leslie Marx

Published: August 2009

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We describe the debate among economists regarding the most appropriate auction formats for carbon allowance auctions. The two leading candidates are a uniform-price sealed-bid auction and an ascending clock auction. We identify the primary trade-o¤s between these auction formats and argue that current economic research supports the recommendation of a uniform-price sealed-bid auction for carbon allowance auctions.