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Ownership structure and prices: A case study of the Swedish tradable green certificate market

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  • Coria, Jessica
  • Jaraitė, Jūratė

Abstract

This paper studies the ownership structure among participants in the Swedish tradable green certificate (TGC) system and its implications for TGC prices. First, we investigate cross-ownership – a situation when a firm is active on both the demand and supply sides of the TGC market – by linking suppliers and obliged parties to their parent firms. Next, we calculate indexes of market concentration that account for cross-ownership. Finally, we use detailed TGC transaction-level data to analyze differences in the prices of the TGCs traded by cross-ownership versus non-cross-ownership firms. Our results show considerable cross-ownership, with many firms active on both TGC supply and demand sides. However, even after accounting for cross-ownership, the market concentration of the entire TGC market is low and has decreased over time. Despite the absence of market concentration, our analysis of TGC prices indicates that cross-ownership firms have the ability to differentiate TGC prices from non-cross-ownership firms. Such behavior is consistent with the behavioral assumption that the ultimate owner's objective is to maximize the total profit of the portfolio of shares, and that, therefore, the pricing behavior would differ from that of a perfectly competitive firm without ownership links to other firms in the industry.

Suggested Citation

  • Coria, Jessica & Jaraitė, Jūratė, 2023. "Ownership structure and prices: A case study of the Swedish tradable green certificate market," Energy Policy, Elsevier, vol. 183(C).
    • Handle: RePEc:eee:enepol:v:183:y:2023:i:c:s030142152300407x
    DOI: 10.1016/j.enpol.2023.113822
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    References listed on IDEAS

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    More about this item

    Keywords

    Microdata; Ownership structure; Prices; Renewable energy policy; Sweden; Tradable green certificates;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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