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Nash equilibrium for coupling of CO2 allowances and electricity markets

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  • Mireille Bossy
  • Nadia Maizi
  • Odile Pourtallier

Abstract

In this note, we present an existence result of a Nash equilibrium between electricity producers selling their production on an electricity market and buying CO2 emission allowances on an auction carbon market. The producers' strategies integrate the coupling of the two markets via the cost functions of the electricity production. We set out a clear Nash equilibrium that can be used to compute equilibrium prices on both markets as well as the related electricity produced and CO2 emissions covered.

Suggested Citation

  • Mireille Bossy & Nadia Maizi & Odile Pourtallier, 2013. "Nash equilibrium for coupling of CO2 allowances and electricity markets," Papers 1311.1535, arXiv.org.
  • Handle: RePEc:arx:papers:1311.1535
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    File URL: http://arxiv.org/pdf/1311.1535
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    References listed on IDEAS

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    1. Rene Carmona & Michael Coulon & Daniel Schwarz, 2012. "Electricity price modeling and asset valuation: a multi-fuel structural approach," Papers 1205.2299, arXiv.org.
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