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Titel:Uncertainty and Speculators in an Auction for Emissions Permits
Autor:Haita-Falah, Corina
Veröffentlicht:2016
URI:https://archiv.ub.uni-marburg.de/es/2024/0496
DOI: https://doi.org/10.17192/es2024.0496
URN: urn:nbn:de:hebis:04-es2024-04969
ISSN: 1867-3678
DDC:330 Wirtschaft
Publikationsdatum:2024-01-19
Lizenz:https://creativecommons.org/publicdomain/mark/1.0

Dokument

Schlagwörter:
emissions trading, uniform-price auction, speculators, risk aversion, cap-and-trade program

Summary:
Auctions have become popular as means of allocating emissions permits in the emissions trading schemes developed around the world. Mostly, only a subset of the regulated polluters participate in these auctions along with speculators, creating a market with relatively few participants and, thus, incentive for strategic bidding. I characterize the bidding behavior of the polluters and the speculators, examining the effect of the latter on the profits of the former and on the auction outcome. It turns out that in addition to bidding for compliance, polluters also bid for speculation in the aftermarket. While the presence of the speculators forces the polluters to bid closer to their true valuations, it also creates a trade-off between increasing the revenue accrued to the regulator and reducing the profits of the auction-participating polluters. Nevertheless, the profits of the latter increase in the speculators' risk aversion.


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