A Note on Market Power in an Emission Permits Market with Banking

Matti Liski () and Juan-Pablo Montero

Working Papers from Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research

Abstract: In this paper, we investigate the effect of market power on the equilibrium path of an emission permits market in which firms can bank current permits for use in later periods. In particular, we study the market equilibrium for a large (potentially dominant) firm and a competitive fringe with rational expectations. We characterize the equilibrium solution for different permits allocations. We find, for example, that if the large firm enjoys a dominant position in the after-banking market, this position gets extended to the market during the banking period regardless of the allocation of the stock (bank) of permits.

Date: 2004-02
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Related works:
Journal Article: A Note on Market Power in an Emission Permits Market with Banking (2005)
Working Paper: A Note on Market Power in an Emission Permits Market with Banking (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:mee:wpaper:0405

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