• xmlui.mirage2.page-structure.header.title
    • français
    • English
  • Help
  • Login
  • Language 
    • Français
    • English
View Item 
  •   BIRD Home
  • Chaires d'entreprise
  • Chaire Finance et développement durable - Approches quantitatives
  • View Item
  •   BIRD Home
  • Chaires d'entreprise
  • Chaire Finance et développement durable - Approches quantitatives
  • View Item
JavaScript is disabled for your browser. Some features of this site may not work without it.

Browse

BIRDResearch centres & CollectionsBy Issue DateAuthorsTitlesTypeThis CollectionBy Issue DateAuthorsTitlesType

My Account

LoginRegister

Statistics

Most Popular ItemsStatistics by CountryMost Popular Authors
Thumbnail

Market Design for Emission Trading Schemes

Carmona, René; Fehr, Max; Hinz, Juri; Porchet, Arnaud (2010), Market Design for Emission Trading Schemes, SIAM Review, 52, 3, p. 403-452. http://dx.doi.org/10.1137/080722813

View/Open
Cahier_Chaire_9.pdf (850.5Kb)
Type
Article accepté pour publication ou publié
Date
2010
Journal name
SIAM Review
Volume
52
Number
3
Publisher
SIAM
Pages
403-452
Publication identifier
http://dx.doi.org/10.1137/080722813
Metadata
Show full item record
Author(s)
Carmona, René
Fehr, Max
Hinz, Juri
Porchet, Arnaud
Abstract (EN)
The main thrust of the paper is the design and the numerical analysis of new cap- and-trade schemes for the control and the reduction of atmospheric pollution. The tools developed are intended to help policy makers and regulators understand the pros and the cons of the emissions markets. We propose a model for an economy where risk neutral firms produce goods to satisfy an inelastic demand and are endowed with permits by the regulator in order to offset their pollution at compliance time and avoid having to pay a penalty. Firms that can easily reduce emissions do so, while those for which it is harder buy permits from those firms anticipating that they will not need them, creating a financial market for pollution credits. Our model captures most of the features of the European Union Emissions Trading Scheme. We show existence of an equilibrium and uniqueness of emissions credit prices. We also characterize the equilibrium prices of goods and the optimal production and trading strategies of the firms. We choose the electricity market in Texas to illustrate numerically the qualitative properties observed during the implementation of the first phase of the European Union cap-and-trade CO2 emissions scheme, comparing the results of cap- and-trade schemes to the Business As Usual benchmark. In particular, we confirm the presence of windfall profits criticized by the opponents of these markets. We also demonstrate the shortcomings of tax and subsidy alternatives. Finally we introduce a relative allocation scheme which despite of its ease of implementation, leads to smaller windfall profits than the standard scheme.
Subjects / Keywords
Emissions Markets; Environmental Finance; Equilibrium models; Cap-and-trade Schemes
JEL
Q5 - Environmental Economics
D5 - General Equilibrium and Disequilibrium

Related items

Showing items related by title and author.

  • Thumbnail
    Hedging and Vertical Integration in Electricity Markets 
    Aïd, René; Chemla, Gilles; Porchet, Arnaud; Touzi, Nizar (2011) Article accepté pour publication ou publié
  • Thumbnail
    Hedging and vertical integration in electricity markets 
    Chemla, Gilles; Porchet, Arnaud; Aïd, René; Touzi, Nizar (2011) Article accepté pour publication ou publié
  • Thumbnail
    Forward Hedging and Vertical Integration in Electricity Markets 
    Chemla, Gilles; Porchet, Arnaud; Touzi, Nizar; Aïd, René (2009) Communication / Conférence
  • Thumbnail
    Econometric Analysis of Carbon Markets : The European Union Emissions Trading Scheme and the Clean Development Mechanism 
    Chevallier, Julien (2012) Ouvrage
  • Thumbnail
    On the Use of Clean Development Mechanism Credits for Compliance in the EU Emissions Trading Scheme 
    Chevallier, Julien (2010) Article accepté pour publication ou publié
Dauphine PSL Bibliothèque logo
Place du Maréchal de Lattre de Tassigny 75775 Paris Cedex 16
Phone: 01 44 05 40 94
Contact
Dauphine PSL logoEQUIS logoCreative Commons logo