Emissions Trading Experiments: Investment Uncertainty and Liability

We conducted three experiments on emissions trading. In experiment 1, we found very high efficiency under no investment uncertainty. In experiment 2, we introduced irreversibility of investment and investment time lag. Under these conditions, we found two cases: the success case and the failure case. Then we introduced three liability rules: seller's liability, Kyoto-first liability, and country-first liability. We found a new case called the theoretical price increase case under country-first, and the intentional bankruptcy case under Kyoto-first.