Technology Adoption in Emission Trading Programs with Market Power

  1. André , Francisco J. 2
  2. Arguedas, Carmen 1
  1. 1 Universidad Autónoma de Madrid
    info

    Universidad Autónoma de Madrid

    Madrid, España

    ROR https://ror.org/01cby8j38

  2. 2 Universidad Complutense de Madrid
    info

    Universidad Complutense de Madrid

    Madrid, España

    ROR 02p0gd045

Revista:
The Energy Journal

ISSN: 0195-6574

Año de publicación: 2018

Volumen: 39

Número: 01

Tipo: Artículo

DOI: 10.5547/01956574.39.SI1.FAND GOOGLE SCHOLAR lock_openAcceso abierto editor

Otras publicaciones en: The Energy Journal

Resumen

In this paper we study the relationship between market power in emission permit markets and endogenous technology adoption. The presence of market power results in a divergence of both abatement and technology adoption levels with respect to the benchmarkscenario of perfect competition, as long as technology adoption becomes more e§ectivein reducing abatement costs. Also, the initial distribution of permits, in particular, theamount of permits initially given to the dominant Örm, is crucial in determining over- orunder-investment in relation to the benchmark model. SpeciÖcally, if the dominant Örmis initially endowed with more permits than the corresponding cost e§ective allocation,this results in under- investment by the dominant Örm and over- investment by the competitive fringe, regardless of the speciÖc amount of permits given to the latter Örms. Theresults are reversed if the dominant Örm is initially endowed with relatively few permits.Our Öndings seem consistent with some empirical evidence about the performance of thepower sector in the initial phases of the European Union Emission Trading System.

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