Tradable Permits Game

Getting started

This exercise teaches how permit markets reach equilibrium and how outcomes compare to a uniform emissions standard.

How we will play

  • The class is split into teams. Each team represents one firm.
  • Each team should choose one reporter device (one browser per team).
  • Teams join through the student portal using a team name.
  • After joining, each team is assigned a random linear MAC with:
    • Intercept in {2000, 4000, 6000, 8000, 10000, 12000}
    • Slope in {1, 2, 3, 4, 5, 6}
  • The common permit allocation is set by the instructor in the admin dashboard.
  • Teams use their assigned MAC and allocation to compute decisions in each phase.

Phase 1: Uniform standard

In the uniform-standard phase, each team submits:

  • Final emissions
  • Abatement
  • Abatement cost

The system checks each submission immediately and allows resubmission until correct.

Phase 2: Called-price permit market

In the called-price phase, the instructor announces a permit price in the dashboard. For that price, each team computes and submits:

  • Optimal abatement at the called price

After all expected teams submit correct values, the dashboard reveals market excess demand at the called price. The instructor can then call a new price and repeat the round.

Phase 3: Constant marginal damages (MD)

In the MD phase, the instructor sets a constant marginal damages value. Each team submits:

  • Efficient emissions for its own firm
  • Efficient industry cap (sum across teams)

Submissions are checked immediately with resubmission allowed.

Notes for students

  • Your firm parameters are not fixed A-F types anymore; they are assigned when you join.
  • Keep your team page open during class because it updates as the phase changes.
  • The instructor sees full team-by-team outcomes in the admin dashboard; students do not see equilibrium internals.

Last updated on Feb 13, 2026