Provision of Renewable Energy using Green Certificates: Market Power and Price Limits

Eirik S. Amundsen () and Gjermund Nese ()
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Eirik S. Amundsen: University of Bergen, Department of Economics, Postal: Hermann Fossgt. 6, N-5007 Bergen, Norway
Gjermund Nese: Institute for Research in Economics and Business Administration (SNF), Postal: Breiviksveien 40, N-5045 Bergen, Norway

No 25/02, Working Papers in Economics from University of Bergen, Department of Economics

Abstract: We formulate an analytic equilibrium model for simultaneously functioning electricity market and a market for Green Certificates. The major focus of the paper is the effect of market power in a Green Certificate system. One of the main results from the analysis is that the certificate system faced with market power basically may collapse into a system of per unit subsidies.

Keywords: Firm Behavior: Theory; Oligopoly and Other Forms of Market Imperfection; Externalities; Redistributive Effects; Environmental Taxes and Subsidies; Production; Pricing; and Market Structure; Size Distribution of Firms; Electric Utilities (search for similar items in EconPapers)
JEL-codes: D21 D43 H23 L11 L94 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2012-12-19
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