EFFECTS OF MARKET POWER AND STRATEGIC MANIPULATION WITHIN A SIMULATED KYOTO-PROTOCOL EMISSIONS TRADING PROGRAM by OLIVER
نویسندگان
چکیده
This paper presents a model of a global CO 2 emissions market as envisaged in the Kyoto Protocol. Using an agent-based simulation, six trading regions abstracted from the Annex-I countries are allowed to trade within a market defined by 1) perfect competition, 2) monopoly, 3) monopsony, and 4) unrestrained strategic battling between powerful buyers and sellers. Cost analysis was performed for various scenarios, namely U.S. and " hot-air " inclusion/exclusion. The cost increases caused by strategic manipulation reveal that both buyers and sellers wielded significant market power, and that neither side was able to dominate. Russia's ability to monopolize was impaired considerably by strategic purchasing.
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