Social Choice in Boston and Pittsburgh, June 18-21

The 12^th Meeting of the Society for Social Choice
and Welfare

June 18-21, 2014 at Boston College

---

View the Conference Program |  

 

---

KEY NOTE SPEAKERS:

• Arrow Lecture: Daron Acemoglu (MIT)
• Condorcet Lecture:  Parag Pathak (MIT)
• Presidential Address: Bhaskar Dutta (U. Warwick)
• Social Choice and Welfare Prize: Vincent Conitzer (Duke U.), Tim Roughgarden (Stanford U.)
• Special SSCW Lecture: Amartya Sen (Harvard U., Nobel Laureate in
  economics 1998)

Local Organizers:

• Hideo Konishi (BC)
• Utku Ünver (BC)

Hiring Mike Malone (internal candidates only)

The requirement to advertise certain positions can lead to funny situations when there is already an incumbent. Santa Clara University made this clear when it recently posted an ad for the adjunct teaching position held by my friend Mike Malone:

Basic Qualifications
The successful applicant will have at least 25 books on topics ranging from the history of Silicon Valley to the biography of microprocessing to interviews with entrepreneurs to the history of human and mechanical memory; will have been published by presses such as Harper/Collins, Doubleday, Random House, St. Martin’s, and SUNY Press; will also have e-books on topics such as home life in the US, home life in the UK, and water conservation; will have worked as both a journalist for a print newspaper and for magazines; will have hosted television and radio productions for PBS, cable television, and ABC; will have worked in electronic media such as being editor of Forbes ASAP or a weekly columnist for ABC.com; will have founded or co-founded at least two start-ups; will have professional connections to Oxford University in the UK as well as to numerous media (print, electronic, and television) in the SF Bay Area and beyond. 

That ad quickly attracted some unwanted attention and was taken down...see e.g.
The Ad People Noticed in Inside Higher Ed, or A Job Description Written for Exactly One Person: A case of a not-so-open search in The Atlantic, by Rebecca Rosen, who writes

"It didn't take long before Internet-sleuth extraordinaire (and frequent Atlantic contributor) Yoni Appelbaum figured out who would get the job: Michael S. Malone, whose qualification not only miraculously mirrored the job description, but who actually already holds the position.

Private universities (such as SCU) are not required by law to post job openings, though other contracts and internal policies may require it. In this case, it seems that SCU's staff policy manual may be the responsible document. It reads, "Notice of a vacant position will be posted for at least five working days before an employment offer may be made to any candidate," though there are certain exemptions possible. In a statement, SCU chalked the posting up to the needs of an internal HR system. "This spring we migrated to a new online job posting and applicant tracking system so that jobs can be posted on the system—including this one with an internal candidate."

...

"About all that I can add," [Mike Malone] wrote to [Rosen] in an email, "is that I'm obviously not doing this for the money, but as my way of giving back to the great professors who taught me when I was at Santa Clara forty years ago. I've had a lot of success turning undergraduate English majors into professional writers, so I stick with it—and will as long as the English department wants me."

The WSJ notes that Gordon and Mokyr disagree about the prospects for growth

Economists Debate: Has All the Important Stuff Already Been Invented? Northwestern University Colleagues Have Opposing Views of 21st Century Economy

"Robert Gordon, a curmudgeonly 73-year-old economist, believes our best days are over. After a century of life-changing innovations that spurred growth, he says, human progress is slowing to a crawl.

"Joel Mokyr, a cheerful 67-year-old economist, imagines a coming age of new inventions, including gene therapies to prolong our life span and miracle seeds that can feed the world without fertilizers.
...
"When Mr. Mokyr described life-prolonging medical advances, Mr. Gordon cut in: "Extending life without curing Alzheimer's means people who can walk but can't think."
...
""Bob says the low-hanging fruit has been picked, because we won't invent indoor plumbing again," Mr. Mokyr said. In speeches, Mr. Gordon often displays images of a flush toilet and iPhone and asks: Which would you give up?"

Antitrust, repugnance and expert testimony in NCAA case

My colleague Roger Noll gets top billing in this story about the courtroom plays being executed in a trial that touches on whether paying college athletes is repugnant: O'Bannon economist may be MVP

OAKLAND, Calif. -- The big names in the lawsuit against the NCAA are Ed O'Bannon, Oscar Robertson and Bill Russell, but the key to the plaintiffs' attempt to transform the NCAA is a 74-year-old economist named Roger Noll who has studied the sports industry for more than 40 years.

The tall and scholarly Stanford professor emeritus already has testified for nearly eight hours and will return for more on Wednesday before U.S. District Judge Claudia Wilken. Noll's job for the players is to convince Wilken that the NCAA's refusal to allow college athletes to sell their names, images and likenesses is a violation of American antitrust laws.

LIVE TWEETING THE TRIAL

ESPN reporter Tom Farrey (@TomFarrey) is tweeting from inside the federal courtroom in Oakland, Calif., alongside legal analyst Lester Munson.Follow the trial live here beginning at 11:30 a.m. (ET).

Relying on exhaustive research and extensive experience testifying in court as an expert witness in antitrust trials, Noll must be able to show that the NCAA is using its stranglehold over college sports to deprive current and former college athletes of their fair share of the money produced by sales of live broadcasts of games, rebroadcasts, video games and other merchandise.

Noll has already shown that the NCAA's restrictions that prevent athletes from selling their names, images and likenesses limit competition in recruiting high school stars (the colleges cannot offer payment to the athletes for use of their names and so forth). He also has shown that the restrictions "distort the industry" and push huge revenue from football and men's basketball into coaches' salaries and palatial facilities.

He also responded on Tuesday to the NCAA's claim that the restrictions on athletes enhance "competitive balance" among NCAA teams by showing, with a compelling chart, that there has never been competitive balance in major college sports and that a small number of schools dominate top 25 lists and national championships.

Noll's research for his testimony is impressive. In a chart that demonstrated the current level of competition for high school stars, he showed the outcomes of recruiting efforts in football and basketball for the five power conferences and Notre Dame. According to Noll's research, for example, the Irish succeeded in 11 out of 17 attempts in 2012 to recruit four- and five-star high school athletes.

During the pretrial stage of the O'Bannon litigation, Noll prepared 750 pages of reports and testified in a pretrial interrogation that went on for four days and filled more than 1,500 pages.

Noll is no stranger to the courtroom. He was the star witness for the NFL Players Association when the players used antitrust litigation to establish free agency. Noll's testimony in a federal court in Minneapolis in 1991 was the key to a verdict from a jury that the NFL's restrictions on player movement violated antitrust laws.

This is not his first time in Wilken's courtroom, either. He testified before Wilken for the winning side in an antitrust trial involving HIV drugs.

The NCAA is responding to Noll's expertise with a cross-examination that began Tuesday and with its own economists, including James Heckman, a Nobel Prize winner from the University of Chicago. The NCAA's principal witness against Noll will be Daniel Rubinfeld, a professor at New York University. Noll and the O'Bannon legal team have already started their attack on Rubinfeld, offering excerpts from a Rubinfeld textbook that admit that the NCAA is a cartel, the first step in any antitrust trial.

Rohit Singla, the NCAA attorney assigned to the cross-examination of Noll, did not make much progress on Tuesday, with Noll repeatedly suggesting that Singla's questions were "vague and based on facts that do not exist."

Singla and the NCAA insist that the players have no ownership of their names, images and likenesses that would permit them to bargain for a share of television broadcasts. All ownership, the NCAA says, resides with the schools, the conferences and itself.

If the NCAA is correct and the players have nothing to sell, it remains unknown why the NCAA would restrict the players from selling what they have no right to sell. It's a question that Noll may address as he continues his testimony on Wednesday.

O'Bannon, Robertson and Russell were highly successful in competition on the basketball court, but Noll's testimony on economic competition in a courtroom will determine the fate of the NCAA's current way of operation.

Futbola eta Ekonomia by Ignacio Palacios-Huerta in the NY Times

Would fútbol by any other name be as interesting?* It is to the economist Ignacio Palacios-Huerta, who has a column in the NY Times motivated by the World Cup and by his recent book "Beautiful Game Theory".

The Beautiful Data Set: The World Cup Can Help Test Economic Theories


*Soccer is  futbola in Euskara, and the Times identifies Ignacio as follows
Ignacio Palacios-Huerta, a professor of management at the London School of Economics, is the head of talent identification at Athletic Club Bilbao, a professional soccer club in Spain, and the author of “Beautiful Game Theory: How Soccer Can Help Economics.”

Repugnant transactions in Nazi memorabilia

Jason Poulos writes:

These two recent news items might interest you --

France's best-known association of Jewish groups, CRIF, had denounced the sale as "harming the memory of victims of Nazi barbarity"...the organisation said selling the objects would give them "unhealthy symbolic value that resembles cynicism and a form of moral indecency".

France auction house cancels Nazi memorabilia sale (BBC; 4/14/14)

"Major auctioneers limit sales of Nazi materials or ban it outright. Online auctioneer eBay Inc. doesn't allow posting any items for sale that were owned by Nazi leaders including Hitler, Joseph Goebbels, Hermann Goering or Heinrich Himmler. Representatives from Bonhams and Sotheby's auction houses said they don't deal in Nazi materials."

Sale of Items Linked to Hitler: Good Business or Bad Taste? (WSJ; 3/25/14)

Organ donations in Brazil: immortal fans

How thousands of football fans are helping to save lives

"A campaign by one of Brazil's biggest football clubs to encourage fans to become organ donors has led to a massive rise in the number of life-changing transplants and reduced waiting lists for organs in the area almost to zero.
...
""Every Brazilian is born with football in the soul," says Jorge Peixoto, of Sport Club Recife, one of the top teams in the north-east of the country.
...
"It asked them to become "immortal fans" donating their organs after they die so that their love for the club will live on in someone else's body."

Video of my Sackler lecture on learning, with Ido Erev

The title of the paper that this will become is "Maximization, Learning and Economic Behavior."



https://www.youtube.com/watch?v=T9cl_aKIHuc
This video is from the colloquium In the Light of Evolution VIII: Darwinian Thinking in the Social Sciences, hosted by the National Academy of Sciences, organized by Brian Skyrms, John Avise and Francisco Ayala, and held January 10-11, 2014 at the Beckman Center in Irvine, CA.

Muriel Niederle on gender and the job market

"The Economics Department (AE1) of Maastricht University hosted the 7th Maastricht Behavioral and Experimental Economics Symposium (M-BEES) on 2 June 2014. The broad topic of the Symposium was Theory and Experiments and centered around the question if and how economic experiments can inform economic theory and vice versa.

Prof. Muriel Niederle, Stanford University, gave a keynote speech on the topic ‘Gender, competitiveness and career choices’ "

Here's a link to the video of her talk.

Qatar, and the role of trusted intermediaries

Trusted intermediaries receive some attention in game theory and market design, since there are things that can be accomplished with the aid of intermediaries that are otherwise difficult or impossible.

The recent prisoner exchange between the United States and the Taliban was intermediated by Qatar. This story from the NY Times emphasizes some of the promises that they made and how they will have to continue to work to carry them out if they wish to be a trusted intermediary in the future: P.O.W. Deal Gives Qatar a Victory, and a New Test

NBER Market Design conference at Stanford, June 8-9, 2014

Here's the program:

NATIONAL BUREAU OF ECONOMIC RESEARCH, INC. Market Design Working Group Meeting Susan Athey and Parag Pathak, Organizers June 8-9, 2014 Sheraton Palo Alto Sequoia/Oak Room 625 El Camino Real Palo Alto, CA PROGRAM Participant List Sunday, June 8: 8:30 am Continental Breakfast 9:00 am Haluk Ergin, Duke University Tayfun Sonmez, Boston College Utku Unver, Boston College Living-Donor Lobar Liver/Lung Exchange 9:45 am Yeon-Koo Che, Columbia University Jinwoo Kim, Seoul National University Fuhito Kojima, Stanford University Stable Matching in Large Economies 10:30 am Break 11:00 am Nicolas Lambert, Stanford University Michael Ostrovsky, Stanford University, Google, and NBER Mikhail Panov, Stanford University Strategic Trading in Informationally Complex Environments  11:45 am Nima Haghpanah, Northwestern University Jason Hartline, Northwestern University Reverse Mechanism Design 12:30 pm Lunch 2:00 pm Umut Dur, North Carolina State University Scott Duke Kominers, Harvard University Parag Pathak, Massachusetts Institute of Technology and NBER Tayfun Sonmez, Boston College The Demise of Walk Zones in Boston: Priorities vs. Precedence in School Choice 2:45 pm Nikhil Agarwal, Yale University and NBER Paulo Somaini, Massachusetts Institute of Technology and NBER Identification and Estimation in Manipulable Assignment Mechanisms 3:30 pm Break 4:00 pm Paul Milgrom, Stanford University Ilya Segal, Stanford University Deferred-Acceptance Auctions and Radio Spectrum Reallocation  4:45 pm Susan Athey, Stanford University and NBER Denis Nekipelov, University of Virginia Designing Large Advertising Markets When Agents Have Heterogeneous Objectives 5:30 pm Adjourn 7:00 pm Dinner at Il Fornaio 520 Cowper Street, Palo Alto Monday, June 9: 8:30 am Continental Breakfast 9:00 am Liran Einav, Stanford University and NBER Chiara Farronato, Stanford University Jonathan Levin, Stanford University and NBER Neel Sundaresan, eBay Research Labs Sales Mechanisms in Online Markets: What Happened to Internet Auctions? 9:45 am Lawrence Ausubel, University of Maryland Oleg Baranov, University of Colorado Boulder Revealed Preference in Bidding: Empirical Evidence from Recent Spectrum Auctions 10:30 am Break 11:00 am Bradley Larsen, Stanford University and NBER The Efficiency of Dynamic, Post-Auction Bargaining: Evidence from Wholesale Used-Auto Auctions  11:45 am Eric Budish, University of Chicago Judd Kessler, University of Pennsylvania Changing the Course Allocation Mechanism at Wharton 12:30 pm Joint ACM EC and NBER Lunch 2:00 pm A Joint Session for EC, NBER and Decentralization on CS and Economics Organized by the Events Chairs:  Susan Athey, Stanford University and NBER Moshe Babaioff, Microsoft Vincent Conitzer, Duke University David Easley, Cornell University Fuhito Kojima, Stanford University Scott Page, University of Michigan Parag Pathak, Massachusetts Institute of Technology and NBER Invited Speakers, Titles and Links to Abstracts: Susan Athey, Stanford University and NBER The Economics of Crypto-Currencies  Joaquin Candela, Facebook Machine Learning and the Facebook Ads Auction Jon Kleinberg, Cornell University Computational Problems for Designed Social Systems Tim Roughgarden, Stanford University Approximately Optimal Mechanisms Motivation, Examples, and Lessons Learned 5:30 pm Adjourn The joint conference, with activities by EC and Decentralization, will continue from Tuesday to Thursday.  On Tuesday morning, EC will have a keynote talk by Matt Jackson, followed by a poster session and EC technical session.  Additional details on the EC Conference, including registration information are available at http://www.sigecom.org/ec14/index.html

Kidney exchange in France

Here (with the aid of Google Translate) is the announcement from November 2013:

  Le don croisé de reins va démarrer en 2014  (Paired kidney donation will start in 2014)

And here's an update from FRANCE ADOT, la fédération des Associations pour le Don d'Organes et de Tissus humains .:

When these transplants living will they start?

Since the passage of the law, such "cross-transplants" have been done because of the difficulty of simultaneously compatible with a pair A pair B. The specialists think that they should have a number approaching fifty pairs for this to work and ABM identifies existing pairs in the hope of starting these transplants living in Spring 2014. Thirty pairs are already on the list. These new forms of graft must respect the rule of anonymity and levies and transplantation between the two pairs can only be made in parallel and simultaneously to preserve equality of opportunity between two recipients.

HT Shengwu Li

Organ transplantation at Lund...and a new hat

I'm returning home from Lund today, where I learned about transplantation, lectured on market design and kidney exchange, and received an honorary doctorate.

Tommy Andersson at Lund has been working with ScandiaTransplant to try to help them initiate kidney exchange in Scandinavia, and I had the opportunity to meet with some of those involved. There seems to be a chance that they will be able to learn from our problems as well as our successes with kidney exchange in the U.S.  Differences in the current organization of transplantation in the Nordic countries and the U.S. will present them with some problems (e.g. in including unsensitized pairs), but may also present them with some opportunities (e.g. in integrating kidney exchange and deceased donation).

At Frank Delmonico's suggestion we also visited  the lab of Stig Steen and his colleagues at Lund University Hospital and Igelosa, to learn more about recovery of organs from deceased donors. His lab repairs organs and tests them: we saw a pig heart, beating without the pig...

Here's an announcement about the degree ceremony, held in Lund Cathedral.  The insignia of the degree Honorary Doctor of Economics and Management are a top hat and a ring, and as you are crowned with the hat there is a cannon salute from just outside the Cathedral:

Nobelpristagare och strateg nya hedersdoktorer vid Ekonomihögskolan i Lund and via Google Translate:
Nobel Laureates and strategist new honorary doctors at the School of Economics in Lund
"Professor Al Roth, 2012 Winner of the Riksbank's prize Memory of Alfred Nobel, and strategy professor JC Spender is the 2014 honorary doctorates in Economics at Lund University."

Here's a picture of me and Tommy in our finery:

Here's the program of the ceremony, and the seminar announcement.

The ceremony includes the celebration of alumni who received their doctorates 50 years ago, Jubilee Doctors. You can experience it in Swedish and Latin, more or less as I did, in the 1957 Ingemar Bergman film Wild Strawberries (from 1:20.50 to about 1:23). Thanks to Hakan Holm for that pointer.
*********************

Update: Stig Steen's lab has posted these pictures of our visit. If the second one extended just a little lower you would see the pig heart pumping on it's own...

Making a market for "dark Wi-Fi"

Just as AirBnb makes a market for underused bedrooms, and Lyft makes a market for underused passenger seats in cars, BandwidthX seeks to make a market in underused ("dark") Wi-Fi, so that your phone provider can link you up through available Wi-Fi when you are on the move (and thus delay having to add expensive extra capacity). BandwidthX's 'dark Wi-Fi' capacity marketplace is in trials, says CEO 

Lost in Transplantation: memoir of an organ donor

There's a new book, Lost in Transplantation, by Eldonna Edwards, the kidney donor who eventually started a nondirected donor chain, and who was the subject of the movie Perfect Strangers, that I blogged about here.  Here's an interview with Ms. Edwards.

The movie was uplifting about the positive experience of being a donor, and so my guess is that (despite the ambiguous title) the book will be too.

School choice and the politics of charter and district schools

School choice involves bridging a lot of political positions:

State Superintendent of Education John White says a civil rights complaint alleging racial discrimination in New Orleans public schools was part of a national power play by unions.

"The complaint also alleges that the admissions policies of several high-performing charters with disproportionately high white enrollment -- including Lusher Charter and Edward Hynes Elementary -- are designed to exclude black students. Because these schools do not participate in the computerized OneApp common enrollment process, the complainants say, they are much less known to parents at schools that are being closed.

White said those policies are not under the state's control. Those schools are overseen by the Orleans Parish School Board, and the state Board of Elementary and Secondary Education is constitutionally prohibited from forcing schools to join OneApp. Moreover, he said, the Recovery School District, which runs OneApp, has tried but failed to persuade the School Board to make those schools join.

"It is high irony that you criticize the people who have tried to create an open-enrollment policy across all schools and have only failed to get the most privileged schools," White said.

The Orleans Parish School Board was not named in the complaint."

Incentives and organ donation

Dan Salomon, the president of the American Society of Transplantation, posted this last year on his presidential blog.
Encouraging organ donation: Removal of Disincentives and Consideration of Incentives

It said in part
"But a new possibility for the AST to creatively reconsider the current situation in the US was suggested by recent discussions with the ASTS regarding a joint response to the follow-up conference in April organized by the TTS and their partners in Doha, Qatar on the 5-year impact of the original Declaration of Istanbul. The Declaration outlined an international position on the ethics of paid organ donation intended to send a clear message that exploitive, paid living donation practices that were sometimes even criminal in nature, were not acceptable. The AST signed a letter supporting the Declaration. In the intervening 5 years, the Declaration had a significant impact on reducing and marginalizing these exploitive practices.

"However, even at the time, concerns were raised here that opposing those specific practices as documented then in developing countries was not equivalent to banning any future consideration of examining financial incentives for living organ donation in the United States. I now think the time has come for a joint AST/ASTS effort to review the current status of living organ donation in the US. I think this effort should consider the problem from the perspective of disincentives that can be removed and from incentives, including but not limited to financial ones that could be acceptable. The effort should harmonize with the ethical principles embodied in the Declaration of Istanbul, but should reflect the real situation of clinical practice and ethics in the US today. The effort should be inclusive of all the major stakeholders in transplantation, not just the AST and ASTS. It is way beyond me to advocate for any particular outcome at this point, but I will be actively exploring the principle of organizing the effort next. "

I'm in Chicago today at a workshop sponsored by the AST and the ASTS on this topic.

Black markets for kidney transplants

miscellaneous black market links I've been collecting, of different vintages:

Nancy Scheper-Hughes in the New Internationalist magazine, May 2014: Human traffic: exposing the brutal organ trade

Arabianbusiness.com reports, April 2014: 410 Saudis said to buy organs on black market
"As many as 410 Saudis have bought organs – mainly kidneys – from the black market for illegal transplantations over the past two years, Makkah daily reported.

Dr Faisal Shaheen, director of the Saudi Center for Organ Transplants, was quoted as saying: “A total of 220 Saudis bought organs for transplants from markets in Pakistan, China and Egypt in 2013 and 190 did the same in 2012 at their own personal expense.”

CNN, March 2014: Lebanese mayor arrested in Spain, accused of attempted organ trafficking
"A wealthy mayor from Lebanon has been arrested in Spain for allegedly offering to pay $55,000 to poor people to obtain liver tissue for his liver transplant, police and a government official announced Wednesday.
...
"The mayor's alleged accomplices recruited and later paid for nine poor people -- eight immigrants and a Spaniard -- to have specialized liver compatibility tests at a clinic in Valencia last summer, police say. The combined tests cost $16,000, which the mayor's aides allegedly paid. Some of the nine people also received small sums of money for taking part, police said.

Just one man, a Romanian immigrant, met the medical criteria for the liver tissue removal and, posing as a legitimate donor, he accompanied the Lebanese mayor last summer to a Barcelona clinic that specializes in liver transplants. But medical workers there, following strict protocols against human organ trafficking, prevented it."

(same story here from another source: http://www.thelocal.es/20140312/police-thwart-first-illegal-organ-sale-in-spain )


Frank Delmonico's 2011 slides: WHO Perspective on Self-sufficiency--Accountability on the National Level calling for countries to develop organ donation sufficient to cover their national needs for transplantation.

The Guardian, in Dec 2010 (with various Eastern Europe mentions): The doctor at the heart of Kosovo's organ scandal As Kosovo's prime minister denies links to organ trafficking, 'Doctor Vampire' is the subject of an international manhunt
"Azerbaijan's prosecutor-general's office said last month that an investigation prompted by information from Ukranian police found "citizens of various countries" had been brought into the country for illegal kidney transplants. Four Ukrainian doctors have been arrested in connection with the alleged racket. Azerbaijani press reported that Sonmez was "involved" in the ring, which also did operations in Ecuador. "

AzeriReport.com reports, August 2010, on Illegal Organ Transplant Mafia Exposed
"The group has been disclosed by the Trafficking Prevention Department of the Ukrainian Ministry of Internal Affairs. The trans-national criminal group was involved in illegal transplantation of kidney and it included 12 members. Yurii Kucher, representative of the Ukrainian Ministry of Internal Affairs, said over three years the group has recruited online and transported Ukrainian, Russia, Moldavian, Belarus and Uzbek citizens to Azerbaijan and Ecuador.
...
The Azerbaijan law enforcement agencies are unavailable for comments. It has been established that the operations were performed in a private clinic inBaku. The lawyers claim if the donors sold their kidney voluntarily, this is not a crime and any accusations are groundless. Many people are ready to sell their internal organs to make money.  A few days prior to the arrests in Ukraine, Yeni Musavat, an Azeri newspaper, sent a journalist to an area in downtown Baku where the illegal organ donor recruiters gathered and formed a market. The Yeni Musavat journalist was offered to go to a hospital to negotiate terms for the kidney removal.  In the clinic, the journalist was asked to consider selling part of his liver."


Yosuke Shimazono, "The state of the international organ trade: a provisional picture based on integration of available information, Bulletin of the World Health Organization Volume 85, Number 12, December 2007, 901-980


HT: various correspondents

The NY Times on market approaches to reducing greenhouse gases

This graphic is from A Price Tag on Carbon as a Climate Rescue Plan, May 30.

How a Carbon Market Works

Governments around the world are experimenting with issuing permits that allow industries to emit carbon dioxide and other greenhouse gases, then restricting those permits to rein in carbon emissions.

CAP

CAP LOWERED

Purchased or

traded permits

Carbon

dioxide

emissions

Carbon

permits

Remaining

carbon

permits

Freely issued permits

CAPPED INDUSTRIES

INDUSTRY A

INDUSTRY B

CAPPED INDUSTRIES

CAP AND PERMIT

The government imposes a cap on the total amount of greenhouse emissions allowed from major industries, then issues permits to match the amount of the cap. Each permit allows the emission of one ton of carbon dioxide, or equivalent.

ISSUE, BUY AND TRADE

Initially, most of the permits are given to industries at no cost. The remaining permits can be bought at a government auction or traded in a carbon market set up for that purpose.

LOWERING THE CAP

The government gradually lowers the carbon cap by a few percent a year, which reduces the number of available permits and cuts the total amount of pollution allowed by the industries under the carbon cap.

No reduction

in emissions

Offset credits

Steep reduction

Investment

CARBON-REDUCING

PROJECT

INDUSTRY A

INDUSTRY B

INDUSTRY A

REDUCING TOTAL EMISSIONS

Industries can reduce their emissions by spending money to upgrade their facilities and equipment, or they can use the carbon market to purchase the carbon permits needed to cover their emissions — whichever is cheaper.

CARBON OFFSETS

Industries can also invest in projects elsewhere that lower carbon emissions, like forestry or burning methane from dairy cows. These projects create “offset credits” that can be used or sold, usually at a lower price than government-auctioned permits.

By The New York Times

Source: California’s Air Resources Board

AER Papers and Proceedings: 2 sections on market design

In January I blogged about these two sessions at the AEA meeting, and now they are published, except for the paper by Milgrom and Segal, which ran into some kind of embargo before the still to be conducted FCC auction...
[The links below go to a page that requires AEA membership to fully access, but you can see the article abstracts by clicking on "Show Article Details"]

Frontiers of Market Design

Implementation Details for Frequent Batch Auctions: Slowing Down Markets to the Blink of an Eye (#72) Eric Budish, Peter Cramton and John Shim

Full-Text Access | Supplementary Materials

Getting More Organs for Transplantation (#73) Judd B. Kessler and Alvin E. Roth

Full-Text Access | Supplementary Materials

Mechanism Design in Large Games: Incentives and Privacy (#74) Michael Kearns, Mallesh M. Pai, Aaron Roth and Jonathan Ullman

Full-Text Access | Supplementary Materials

Investment Incentives in Labor Market Matching (#75) John William Hatfield, Fuhito Kojima and Scott Duke Kominers

Full-Text Access | Supplementary Materials

Market Design for Auction Markets

The VCG Auction in Theory and Practice (#76) Hal R. Varian and Christopher Harris

Full-Text Access | Supplementary Materials

Market Design and the Evolution of the Combinatorial Clock Auction (#77) Lawrence M. Ausubel and Oleg V. Baranov

Full-Text Access | Supplementary Materials

The Continuous Combinatorial Auction Architecture (#78) Charles R. Plott, Hsing-Yang Lee and Travis Maron

Full-Text Access | Supplementary Materials