Market Power in Pollution Permit Markets
AbstractAs with other commodity markets, markets for trading pollution permits have not been immune to market power concerns. In this paper, I survey the existing literature on market power in permit trading but also contribute with some new results and ideas. I start the survey with Hahn’s (1984) dominant-firm (static) model that I then extend to the case in which there are two or more strategic firms that may also strategically interact in the output market, to the case in which current permits can be stored for future use (as in most existing and proposed market designs), to the possibility of collusive behavior, and to the case in which permits are auctioned off instead of allocated for free to firms. I finish the paper with a review of empirical evidence on market power, if any, with particular attention to the U.S. sulfur market and the Southern California NOx market.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research in its series Working Papers with number 0906.
Date of creation: Jul 2009
Date of revision:
Contact details of provider:
Postal: 77 Massachusetts Ave. (Building E40-279), Cambridge, MA 02139-4307
Phone: (617) 253-3551
Fax: (617) 253-9845
Web page: http://tisiphone.mit.edu/RePEc
More information through EDIRC
Other versions of this item:
- D40 - Microeconomics - - Market Structure and Pricing - - - General
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-01-10 (All new papers)
- NEP-ENE-2010-01-10 (Energy Economics)
- NEP-ENV-2010-01-10 (Environmental Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- van Egteren, Henry & Weber, Marian, 1996. "Marketable Permits, Market Power, and Cheating," Journal of Environmental Economics and Management, Elsevier, vol. 30(2), pages 161-173, March.
- Nils-Henrik Mørch von der Fehr, 1993.
"Tradable emission rights and strategic interaction,"
Environmental & Resource Economics,
European Association of Environmental and Resource Economists, vol. 3(2), pages 129-151, April.
- Morch von der Fehr, N-H., 1991. "Tradable Emission Rights and Strategic Interaction," Memorandum 11/1991, Oslo University, Department of Economics.
- Charles A. Holt & William M. Shobe, 2013. "Banking and price containment in the California greenhouse gas emissions market: an experimental analysis of market design," Working Papers 2013-01, Center for Economic and Policy Studies.
- Francisco Alvarez & Francisco J. André, 2013. "Auctioning vs. Grandfathering in Cap-and-Trade Systems with Market Power and Incomplete Information," Working Papers 2013.98, Fondazione Eni Enrico Mattei.
- Vincent Bertrand, 2013. "Modeling of Emission Allowance Markets: A Literature Review," Working Papers 1304, Chaire Economie du Climat.
- Juan-Pablo Montero, 2011. "Cuotas de Pesca y Libre Competencia: Algunas Reflexiones para la Nueva Ley de Pesca," Documentos de Trabajo 405, Instituto de Economia. Pontificia Universidad Católica de Chile..
- Tanaka, Makoto & Chen, Yihsu, 2013. "Market power in renewable portfolio standards," Energy Economics, Elsevier, vol. 39(C), pages 187-196.
- Heindl, Peter, 2011. "The impact of informational costs in quantity regulation of pollutants. The case of the European Emissions Trading Scheme," ZEW Discussion Papers 11-040, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Makoto Tanaka, 2012. "Multi-Sector Model of Tradable Emission Permits," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 51(1), pages 61-77, January.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sharmila Ganguly) The email address of this maintainer does not seem to be valid anymore. Please ask Sharmila Ganguly to update the entry or send us the correct address.
If references are entirely missing, you can add them using this form.