EconPapers    
Economics at your fingertips  
 

Climate Change Policy and Its Effect on Market Power in the Gas Market

David M Newbery ()

Journal of the European Economic Association, 2008, vol. 6, issue 4, 727-751

Abstract: The European Emissions Trading Scheme (ETS) limits CO_2 emissions from covered sectors, especially electricity (accounting for about 56%). At EUR 44 billion per annum. the ETS is the largest emissions trading system ever, 40 times larger than US programmes. The article demonstrates that fixing the quantity rather than the price of carbon reduces the price elasticity of demand for gas appreciably, amplifying the market power of gas suppliers, and amplifying the impact of gas price increases on the electricity price. A rough estimate using British data suggests that this could increase the Lerner Index by 50%. (JEL: Q54, Q58, L94) (c) 2008 by the European Economic Association.

JEL-codes: Q54 Q58 L94 (search for similar items in EconPapers)
Date: 2008
References: Add references at CitEc
Citations: View citations in EconPapers (13) Track citations by RSS feed

Downloads: (external link)
http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1542-4774/issues link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Climate change policy and its effect on market power in the gas market (2006) Downloads
Working Paper: Climate Change Policy and its Effect on Market Power in the Gas Market (2006) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tpr:jeurec:v:6:y:2008:i:4:p:727-751

Ordering information: This journal article can be ordered from
http://www.mitpressjournals.org/jeea

Access Statistics for this article

Journal of the European Economic Association is currently edited by Xavier Vives, George-Marios Angeletos, Orazio P. Attanasio, Fabio Canova and Roberto Perotti

More articles in Journal of the European Economic Association from MIT Press
Bibliographic data for series maintained by Ann Olson ().

 
Page updated 2019-07-28
Handle: RePEc:tpr:jeurec:v:6:y:2008:i:4:p:727-751