A Note on Market Power in an Emission Permits Market with Banking
AbstractIn this paper, we investigate the effect of market power on the equilibrium path of an emission permits market in which firms can bank current permits for use in later periods. In particular, we study the market equilibrium for a large (potentially dominant) firm and a competitive fringe with rational expectations. We characterize the equilibrium solution for different permits allocations. We find, for example, that if the large firm enjoys a dominant position in the after-banking market, this position gets extended to the market during the banking period regardless of the allocation of the stock (bank) of permits.
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Bibliographic InfoPaper provided by Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research in its series Working Papers with number 0405.
Date of creation: Feb 2004
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Other versions of this item:
- Matti Liski & Juan-Pablo Montero, 2005. "A Note on Market Power in an Emission Permits Market with Banking," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 31(2), pages 159-173, 06.
- Matti Liski & Juan-Pablo Montero, 2003. "A Note on Market Power in an Emission Permits Market with Banking," Documentos de Trabajo 236, Instituto de Economia. Pontificia Universidad Católica de Chile..
- Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Costs; Distributional Effects; Employment Effects
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
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