Auctioning emission permits with market power
dc.contributor.author | Álvarez González, Francisco | |
dc.contributor.author | André García, Francisco Javier | |
dc.date.accessioned | 2023-06-18T05:54:57Z | |
dc.date.available | 2023-06-18T05:54:57Z | |
dc.date.issued | 2016 | |
dc.description.abstract | We analyze emission permit auctions in a framework in which a dominant firm enjoys market power both in the auction and in the secondary market while its competitor behaves in a competitive way. We obtain linear equilibrium bidding strategies for both firms and a unique equilibrium of the auction, which is optimal ex-post for the dominant firm. Under specific distributional assumptions we conclude that the auction always awards less permits to the dominant firm than the cost-effective amount. Our results serve as a warning about the properties of auctioning under market power. Under interior solution the auction allocation is dominated by grandfathering in terms of aggregated cost with probability one. As a policy implication, the specific design of the auction turns out to be crucial for cost-effectiveness. The chances of the auction to outperform grandfathering require that the former is capable of diluting the market power that is present in the secondary market. | |
dc.description.department | Depto. de Análisis Económico y Economía Cuantitativa | |
dc.description.faculty | Fac. de Ciencias Económicas y Empresariales | |
dc.description.refereed | TRUE | |
dc.description.sponsorship | Ministerio de Ciencia e Innovación (MICINN)/FEDER | |
dc.description.status | pub | |
dc.eprint.id | https://eprints.ucm.es/id/eprint/55343 | |
dc.identifier.doi | 10.1515/bejeap-2015-0041 | |
dc.identifier.issn | 1935-1682 | |
dc.identifier.officialurl | https://doi.org/10.1515/bejeap-2015-0041 | |
dc.identifier.uri | https://hdl.handle.net/20.500.14352/23583 | |
dc.issue.number | 4 | |
dc.journal.title | B.E. Journal of Economic Analysis Policy | |
dc.language.iso | eng | |
dc.publisher | DE GRUYTER | |
dc.relation.projectID | ECO2012-39553-C04-01 | |
dc.rights.accessRights | restricted access | |
dc.subject.keyword | Cap-and-trade systems | |
dc.subject.keyword | Auctions | |
dc.subject.keyword | Grandfathering | |
dc.subject.keyword | Market power | |
dc.subject.keyword | Bayesian games of incomplete information. | |
dc.subject.ucm | Comercio | |
dc.subject.ucm | Microeconomía | |
dc.subject.unesco | 5304.03 Comercio exterior | |
dc.subject.unesco | 5307.15 Teoría Microeconómica | |
dc.title | Auctioning emission permits with market power | |
dc.type | journal article | |
dc.volume.number | 16 | |
dspace.entity.type | Publication | |
relation.isAuthorOfPublication | 5c6d1bab-3a96-455e-96d4-556c4c6c23da | |
relation.isAuthorOfPublication | f0c35ff8-abed-4dd3-9388-4bd41a288ee6 | |
relation.isAuthorOfPublication.latestForDiscovery | 5c6d1bab-3a96-455e-96d4-556c4c6c23da |
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