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A network-based analysis of the European Emission Market

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  • Andreas Karpf

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Antoine Mandel

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Stefano Battiston

    (Department of Banking and Finance - UZH - Universität Zürich [Zürich] = University of Zurich)

Abstract

This paper analyses the European Emission Trading System (ETS) from a network perspective. It is shown that the network exhibits a strong core-periphery structure also reflected in the network formation process. Due to a lack of centralized market places, operators of installations which fall under the EU ETS regulations have to resort to local networks or financial intermediaries if they want to participate in the market. This undermines the central idea of the ETS to exploit marginal abatement costs.

Suggested Citation

  • Andreas Karpf & Antoine Mandel & Stefano Battiston, 2015. "A network-based analysis of the European Emission Market," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01243694, HAL.
    • Handle: RePEc:hal:cesptp:halshs-01243694
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01243694
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    References listed on IDEAS

    as
    1. Dan Li & Norman Schürhoff, 2019. "Dealer Networks," Journal of Finance, American Finance Association, vol. 74(1), pages 91-144, February.
    2. repec:dau:papers:123456789/10174 is not listed on IDEAS
    3. Miranda A. Schreurs & Yves Tiberghien, 2007. "Multi-Level Reinforcement: Explaining European Union Leadership in Climate Change Mitigation," Global Environmental Politics, MIT Press, vol. 7(4), pages 19-46, November.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    network; emission market; ETS; network topology;
    All these keywords.

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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