Price and Network Dynamics in the European Carbon Market
Andreas Karpf (),
Antoine Mandel () and
Stefano Battiston ()
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Stefano Battiston: Department of Banking and Finance - University of Zürich
Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne
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 (search for similar items in EconPapers)
JEL-codes: L14 D85 Q56 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene, nep-env, nep-mst, nep-ore and nep-res
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Journal Article: Price and network dynamics in the European carbon market (2018)
Working Paper: Price and network dynamics in the European carbon market (2018)
Working Paper: Price and Network Dynamics in the European Carbon Market (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:mse:cesdoc:17010
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