Abstract
The present paper analyzes the efficiency of emission permit trading between two imperfectly competitive product markets. Even if firms are price takers in permit markets, the integration of permit markets can decrease welfare because of imperfect competition in product markets. If there is asymmetric information between the regulator and firms, the integration of the permit markets could have a positive effect related to the flexibility of an integrated market; this flexibility can justify integrating the permit markets.
| Original language | English |
|---|---|
| Pages (from-to) | 347-364 |
| Number of pages | 18 |
| Journal | Environmental and Resource Economics |
| Volume | 50 |
| Issue number | 3 |
| DOIs | |
| Publication status | Published - 1 Jan 2011 |
Keywords
- Demand uncertainty
- Emission permit market
- Imperfect competition
- Market integration
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