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Price and Network Dynamics in the European Carbon Market

Andreas Karpf (), Antoine Mandel () and Stefano Battiston

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: This paper presents an analysis of the European Emission Trading System as a transaction network. It is shown that, given the lack of a centralized market place, industrial actors had to resort to local connections and financial intermediaries to participate in the market. This gave rise to a hierarchical structure in the transaction network. To empirically relate networks statistics to market outcomes a PLS-PM modeling technique is introduced. It is shown that the asymmetries in the network induced market inefficiencies (e.g. increased bid-ask spread). Albeit the efficiency of the market has improved from the beginning of Phase II, the asymmetry persists, imposing unnecessary additional costs on agents and reducing the effectiveness of the market as a mitigation instrument.

Keywords: Carbon market; network; climate economics; réseaux; Marché du carbone; économie du climat (search for similar items in EconPapers)
Date: 2017-02
New Economics Papers: this item is included in nep-ene, nep-env, nep-mst and nep-net
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-01484117
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Published in 2017

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Related works:
Journal Article: Price and network dynamics in the European carbon market (2018) Downloads
Working Paper: Price and network dynamics in the European carbon market (2018) Downloads
Working Paper: Price and network dynamics in the European carbon market (2018) Downloads
Working Paper: Price and network dynamics in the European carbon market (2018) Downloads
Working Paper: Price and Network Dynamics in the European Carbon Market (2017) Downloads
Working Paper: Price and Network Dynamics in the European Carbon Market (2017) Downloads
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