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Asymmetric Nash equilibrium in emission rights auctions

Author

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  • Rao, Congjun
  • Zhao, Yong
  • Li, Chuanfeng

Abstract

This paper studies the problems of emission rights auctions, and presents a uniform price auction mechanism based on three assumptions, i.e., all buyers are asymmetric, every buyer submits a nonincreasing continuous demand function, and every buyer's valuation to per unit of the emission rights is common value information. It focuses on solving the asymmetric Nash equilibrium for this auction mechanism. It concludes that there exist multiple Nash equilibria in our auction mechanism, but the arbitrary low equilibrium prices cannot emerge. We also give several suggestions on how to induce the auction to a desired ideal equilibrium state in mechanism design of emission rights auctions.

Suggested Citation

  • Rao, Congjun & Zhao, Yong & Li, Chuanfeng, 2012. "Asymmetric Nash equilibrium in emission rights auctions," Technological Forecasting and Social Change, Elsevier, vol. 79(3), pages 429-435.
  • Handle: RePEc:eee:tefoso:v:79:y:2012:i:3:p:429-435
    DOI: 10.1016/j.techfore.2011.08.012
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    Cited by:

    1. Zhuo Hu & Dong Huang & Congjun Rao & Xiaolin Xu, 2016. "Innovative allocation mechanism design of carbon emission permits in China under the background of a low-carbon economy," Environment and Planning B, , vol. 43(2), pages 419-434, March.

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