Abstract
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.
| Original language | English |
|---|---|
| Journal | Journal of Institutional and Theoretical Economics |
| Volume | 173 |
| Issue number | 2 |
| Pages (from-to) | 301-321 |
| Number of pages | 21 |
| ISSN | 0932-4569 |
| DOIs | |
| Publication status | Published - Jun 2017 |