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Market power in interactive environmental and energy markets: The case of green certificates

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Abstract

A market for Tradable Green Certificates (TGCs) is strongly interwoven in the electricity market as the producers of green electricity are also the suppliers of TGCs. Therefore, strategic interaction may result. We formulate an analytic equilibrium model for simultaneously functioning electricity and TGC markets, and focus on the role of market power (i.e. Stackelberg leadership). One result is that a certificate system faced with market power may collapse into a system of per unit subsidies. Also, the model shows that TGCs may be an imprecise instrument for regulating the generation of green electricity.

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  • Amundsen, Eirik Schrøder & Nese, Gjermund, 2016. "Market power in interactive environmental and energy markets: The case of green certificates," Working Papers in Economics 04/16, University of Bergen, Department of Economics.
    • Handle: RePEc:hhs:bergec:2016_004
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    Cited by:

    1. Ganhammar, Kajsa, 2023. "Bidding Behaviour in Interdependent Markets for Electricity and Green Certificates," Working Papers 2023:8, Lund University, Department of Economics.
    2. Hui, Wang & Xin-gang, Zhao & Ling-zhi, Ren & Fan, Lu, 2021. "An agent-based modeling approach for analyzing the influence of market participants’ strategic behavior on green certificate trading," Energy, Elsevier, vol. 218(C).

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    More about this item

    Keywords

    Renewable energy; Electricity; Green Certificates; Market power;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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