The illiquidity of water markets

José-Antonio Espín-Sánchez, Javier Donna 02 February 2014

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Seventy per cent of fresh water consumption worldwide is used for irrigation, and water is becoming increasingly scarce in regions such as India, Latin America and, more recently, the US (Barnett et al. 2005). Water markets are emerging as a solution to this scarcity (Grafton et al. 2011). Markets are generally thought to increase efficiency because there are gains from trade when users are heterogeneous in demand. However, there is substantial controversy about the efficacy of water markets in the presence of frictions (Johansson 2000).

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Topics:  Economic history

Tags:  auctions, liquidity constraints, quotas, water markets

Limited attention costs: Sometimes driving a mile costs $200

Nicola Lacetera, Devin Pope, Justin Sydnor 20 May 2011

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Imagine that you are in the process of buying a used car. You are considering a three-year-old Honda Accord, with 42,187 miles, and a five-year-old Toyota Camry, with 67,812 miles.

Now, close your eyes and try to remember the exact mileage of the two cars.

Chances are that you will recall the mileage of the Accord to be 42,000, or even 40,000, and the mileage on the Camry to be 67,000, or even 60,000.

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Topics:  Frontiers of economic research

Tags:  auctions, decision making, memory

Central bank liquidity and “toxic asset” auctions

Paul Klemperer 25 September 2009

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The crisis began in early August 2007, and a bank run led to Northern Rock’s collapse in mid-September. The Bank of England wanted urgently to supply liquidity to banks and was therefore willing to accept a wider-than-usual range of collateral, but it wanted a correspondingly higher interest rate against any weaker collateral it took.

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Topics:  Financial markets Global crisis

Tags:  auctions, toxic assets, global crisis

Designing internet auctions

Paul Milgrom interviewed by Romesh Vaitilingam,

Date Published

Fri, 12/05/2008

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Topics

Frontiers of economic research
Tags
auctions, sponsored-search auction, internet
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Auction greenhouse emission rights with targeted compensation

Lans Bovenberg, Herman Vollebergh 17 September 2008

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The current system for tradable carbon emission permits in Europe suffers from severe shortcomings. EU member states hand out these permits without charge using criteria that result in perverse behavioural effects. For instance, some member states distribute permits based on current production. This provides an incentive to expand production capacity in order to obtain additional, valuable emission rights.

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Topics:  Environment

Tags:  climate change, auctions

Art puzzles

Nauro F Campos 03 May 2008

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The visual arts market, in general, and the prices commanded by paintings at the two leading auction houses, in particular, tend to peak at the end of economic expansions, so the various records broken so far in 2008 may spell mixed news. The arts market remains of interest to economists, though, as it an empirical testing ground for auction theory, in which interest has grown significantly in recent years (Klemperer 2004).

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Topics:  Frontiers of economic research

Tags:  auctions, art, paintings