Environmental markets: What do we learn from the lab?

In recent years some of the most influential policies have been either tested or evaluated using experimental methods. Experiments have provided significant insights on the implications of different designs on market outcomes and the lessons learned have helped improve academic debate and the interaction between policy makers and researchers. In this paper we provide an overview of experiments relating to environmental markets. Expenditure on environmental programs has been growing in importance yet it is controversial in current times due to the fiscal cuts around the world. Finding cost effective ways of reaching environmental goals is thus an objective of most governments. Research using experiments can help isolate how individuals and regulators would respond to incentives and therefore identify the most effective programs. JEL: Q58, C9 Lana Friesen School of Economics University of Queensland Australia Lata Gangadharan Department of Economics Monash University Australia © 2012 Lana Friesen and Lata Gangadharan All rights reserved. No part of this paper may be reproduced in any form, or stored in a retrieval system, without the prior written permission of the author.