Incentives for Strategic Behavior in the Permit Market

Cathrine Hagem

Strategic Behavior and the Environment, 2013, vol. 3, issue 3, 149-167

Abstract: In an international permit trading regime, the initial allocation of permits across countries determines the participating countries' trading position. Large permit trading countries on both sides of the market can exploit their market power in the permit market. We analyze how the competitive environment on the permit market affects countries' gain from strategic manipulation of the permit price. We conclude that gains from strategic behavior depend on whether there are other strategic players on the same or opposite side of the market.

Keywords: Emissions permits; Strategic permit trading; Climate agreements; Market power (search for similar items in EconPapers)
JEL-codes: D43 L13 Q54 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (3)

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