Experimental Insights into Carbon Policies: Assessing the Environmental and Economic Impacts of Carbon Taxes and Emissions Trading Systems

Last registered on September 19, 2025

Pre-Trial

General Information

Title

RCT ID

AEARCTR-0016787

Initial registration date

September 16, 2025

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published

September 19, 2025, 10:11 AM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

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Primary Investigator

Name

Yating Chuang

Affiliation

Academia Sinica

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Other Primary Investigator(s)

PI Name

James Wei Chen

PI Affiliation

Department of Agricultural Economics, National Taiwan University

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PI Name

Shihan Huang

PI Affiliation

Department of Agricultural Economics, National Taiwan University

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Additional Trial Information

Status

In development

Start date

2025-09-17

End date

2026-12-31

Keywords

Environment & Energy

Additional Keywords

Carbon Trading, Carbon Tax

JEL code(s)

C9, H2, Q5

Secondary IDs

Prior work

This trial does not extend or rely on any prior RCTs.

Abstract

This experiment examines how firms adjust production decisions under different environmental policy regimes. Participants are assigned to one of three treatments: a control group with free output choice and emissions information, a carbon tax treatment where firms pay for each unit of emissions, and a carbon trading treatment requiring permits that can be traded in a market. Firms are divided into large and small producers, differing in production capacity and emission intensity. Within the trading treatment, we compare two allocation schemes—grandfathering (permits allocated based on initial endowments) versus equal allocation without grandfathering. Across 12 rounds, participants make output decisions based on marginal costs, policy rules, and market conditions, with real monetary payoffs determined by one randomly selected round. To connect laboratory choices to real-world environmental impact, the organizers purchase real-world carbon offsets based on the lab result. This design links participants’ profit-maximizing strategies directly to tangible carbon outcomes, allowing us to study policy effectiveness, firm heterogeneity, and the role of permit allocation in shaping both market efficiency and environmental results.

External Link(s)

Registration Citation

Citation

Chen, James Wei , Yating Chuang and Shihan Huang. 2025. "Experimental Insights into Carbon Policies: Assessing the Environmental and Economic Impacts of Carbon Taxes and Emissions Trading Systems." AEA RCT Registry. September 19. https://doi.org/10.1257/rct.16787-1.0

Sponsors & Partners

Experimental Details

Interventions

Intervention(s)

An economical experiment built on the oTree framework, specifically designed to study the impact of different carbon reduction policies, including carbon trading and carbon tax, on firm production behavior.

Intervention Start Date

2025-09-17

Intervention End Date

2026-12-31

Primary Outcomes

Primary Outcomes (end points)

Emission: individual emission / group emission / total emission
Prodiction: individual production / group production / total production
Profit: Net profit / group profit / round payoff / final total payoff points
Price: market price / item market price
Trading quamtity: executed trades / total bought / total sold / total spent / total earned / total value
Net social benefit

Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)

Secondary Outcomes (explanation)

Experimental Design

This experiment consists of three treatments simulating firms’ production decisions under
different environmental policies.

Group I (Control): firms freely decide output, with information on their carbon emissions.
Group II (Carbon Tax): firms freely decide output but must pay a tax for each unit of emissions, so decisions depend on both production costs and tax costs.
Group III (Carbon Trading): firms need permits to produce and may trade them in a market before deciding output.

Each round, participants choose output based on marginal costs and policy rules, with 12 rounds in total.Firms are divided into large and small producers, differing in production capacity and emission intensity. Initial conditions include allocation of permits and starting capital. At the end, one round is randomly selected for real monetary payment based on profits. To highlight the environmental impact, the experiment
organizers purchase 50 tons of carbon offsets and deduct participants’ emissions, making choices in the lab directly linked to real-world carbon outcomes.

Experimental Design Details

Not available

Randomization Method

randomization done by a computer program

Randomization Unit

experimental sessions (20 sessions × 15 participants × 3 within-session policy conditions × 12 rounds).

Was the treatment clustered?

Experiment Characteristics

Sample size: planned number of clusters

20 laboratory sessions (clusters) planned in total, assigned at the session level to one of two pricing-rule arms (VWAP vs Median).

Sample size: planned number of observations

300 participants (unique individuals) for the 20-session plan (15 per session). For transparency about the panel: 10,800 participant-round observations (20 sessions × 15 participants × 3 within-session policy conditions × 12 rounds). Practice rounds are excluded from analysis.

Sample size (or number of clusters) by treatment arms

VWAP arm: 10 sessions (clusters), 150 participants (15 per session)
Median arm: 10 sessions (clusters), 150 participants (15 per session)

Minimum detectable effect size for main outcomes (accounting for sample design and clustering)

Supporting Documents and Materials

IRB

Institutional Review Boards (IRBs)

IRB Name

National Taiwan University

IRB Approval Date

2024-01-29

IRB Approval Number

202312HS033

Analysis Plan