Do Transaction Costs Influence Firm Trading Behaviour in the European Emissions Trading System?

Jūratė Jaraite-Kažukauskė and Andrius Kazukauskas

Environmental & Resource Economics, 2015, vol. 62, issue 3, 583-613

Abstract: This study is one of the first to empirically investigate firm trading behaviour and the importance of permit trading transaction costs, such as information costs and search costs, in the first phase of the European Union’s Emissions Trading System (EU ETS). The signs and significance of our constructed transaction costs proxy variables indicate for a presence of these costs in the initial years of the EU ETS. In particular, this paper shows that ETS firms with the smaller number of installations and with less trading experience were less likely to participate in the European emissions trading market and traded the lower quantities of permits. Furthermore, these firms chose to trade permits indirectly via third parties. This study also supports the concerns that transaction costs could be excessive for smaller participants and firms operating in the new EU member states. Copyright Springer Science+Business Media Dordrecht 2015

Keywords: Climate policy; Emissions trading; EU ETS; European Union; Firm-level data; Trading behaviour; Transaction costs (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/s10640-014-9831-7

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