Aufsatz
Uncertainty and Speculators in an Auction for Emissions Permits
Zusammenfassung
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.
Zitierform
In: Journal of Regulatory Economics, June 2016, Volume 49, Issue 3, pp. 315-343Zitieren
@article{urn:nbn:de:hebis:34-2016081050649,
author={Haita-Falah, Corina},
title={Uncertainty and Speculators in an Auction for Emissions Permits},
year={2016}
}
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2016-08-10T07:06:19Z 2016-08-10T07:06:19Z 2016-04-16 urn:nbn:de:hebis:34-2016081050649 http://hdl.handle.net/123456789/2016081050649 eng Springer Urheberrechtlich geschützt https://rightsstatements.org/page/InC/1.0/ cap-and-trade program emissions trading risk aversion speculators uniform-price auction 330 Uncertainty and Speculators in an Auction for Emissions Permits Aufsatz 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. open access In: Journal of Regulatory Economics, June 2016, Volume 49, Issue 3, pp. 315-343 Haita-Falah, Corina European Union (EU) Horizon 2020 program, action ERC-2014-STG, Project HUCO, grant number 636846 doi:10.1007/s11149-016-9299-1 D44 D45 Q55
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