TY - JOUR
T1 - Market power in interactive environmental and energy markets
T2 - the case of green certificates
AU - Amundsen, Eirik S
AU - Nese, Gjermund
PY - 2017/6
Y1 - 2017/6
N2 - A market for tradable green certificates (TGCs) is strongly interwoven in the electricity market in that the producers of green electricity are also the suppliers of TGCs. Therefore, strategic interaction may result. We formulate an analytic equilibrium model for simultaneously functioning electricity and TGC markets, and focus on the role of market power (i.e., Stackelberg leadership). One result is that a certificate system faced with market power may collapse into a system of per-unit subsidies. Also, the model shows that TGCs may be an imprecise instrument for regulating the generation of green electricity.
AB - A market for tradable green certificates (TGCs) is strongly interwoven in the electricity market in that the producers of green electricity are also the suppliers of TGCs. Therefore, strategic interaction may result. We formulate an analytic equilibrium model for simultaneously functioning electricity and TGC markets, and focus on the role of market power (i.e., Stackelberg leadership). One result is that a certificate system faced with market power may collapse into a system of per-unit subsidies. Also, the model shows that TGCs may be an imprecise instrument for regulating the generation of green electricity.
U2 - 10.1628/093245616X14690820714372
DO - 10.1628/093245616X14690820714372
M3 - Journal article
SN - 0932-4569
VL - 173
SP - 301
EP - 321
JO - Journal of Institutional and Theoretical Economics
JF - Journal of Institutional and Theoretical Economics
IS - 2
ER -