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Tradable emission permits: beyond pollution abatement motives

Author

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  • Maria Eugenia Sanin

    () (EPEE, Université d´Evry Val d´Essonne; Chaire Energie et Prospérité - École Polytechnique; Chaire European Electricity Markets - Dauphine Foundation.)

Abstract

In this paper we study how the electricity market character- istics determines the choices made by electricity generators in the U.S. market for SO2 allowances. Counterparts can be cho- sen among three alternatives: market makers, brokers or another generator. We find that the SO2 allowances market is de facto regionalized due to the regionalization of the electricity market. The national dimension only appears when there are local im- balances in the electricity market that give strong incentives to search for a better price outside of the region. Additionally, we identify the influence of the regulatory framework, i.e. the divi- sion in phases and the chosen allowance surrender date. Finally, we show that the previous results are robust to Enron's abnormal behavior during 2000-2001 and its posterior bankruptcy.

Suggested Citation

  • Maria Eugenia Sanin, 2016. "Tradable emission permits: beyond pollution abatement motives," Documents de recherche 16-01, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
  • Handle: RePEc:eve:wpaper:16-01
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    File URL: http://epee.univ-evry.fr/RePEc/2016/16-01.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    radable emission permits; counterpart choice; acid rain market;

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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