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For want of a chair: Teaching price formation using a cap and trade game.

Authors :
Carattini, Stefano
Fenichel, Eli P.
Gordan, Alexander
Gourley, Patrick
Source :
Journal of Economic Education; Jan-Mar2020, Vol. 51 Issue 1, p52-66, 15p, 2 Charts, 2 Graphs
Publication Year :
2020

Abstract

"Cap and trade" is one of the most innovative policy options developed by environmental economists. By placing a cap on a social bad and allowing firms to buy and sell the right to generate it, policymakers combine government intervention with market-based incentives to improve welfare and internalize the externality. Such programs represent a great opportunity for instructors to show students how economic theory is used in the real world. Students can learn several important tenets of economics by playing an in-class game based on musical chairs, which creates a market for pollution using a mobile app or paper-based interaction. This active learning method engages students and improves comprehension of price formation, gains from trade, voluntary response to incentives, and an important environmental policy. [ABSTRACT FROM AUTHOR]

Details

Language :
English
ISSN :
00220485
Volume :
51
Issue :
1
Database :
Complementary Index
Journal :
Journal of Economic Education
Publication Type :
Academic Journal
Accession number :
141675854
Full Text :
https://doi.org/10.1080/00220485.2019.1687379