Endogenous market power in emissions markets
نویسنده
چکیده
Previous approaches on market power in emissions trading markets rely on the existence of a subset of competitive players. In this paper, I relax this assumption and treat market power as an endogenous concept which depends on the initial allocation of allowances. All parties realize their potential influence on the market price. This approach allows a clear comparative statics of the impact of changes in allowance allocation on the efficiency of markets. I discuss specific examples which show the deviations from the traditional approach. Numerical simulations of international permit markets show the quantitative importance of treating market power as endogenous.
منابع مشابه
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