scholarly journals Price Discovery of Consignment Auctions for Emission Permits

Energies ◽  
2021 ◽  
Vol 14 (21) ◽  
pp. 6985
Author(s):  
Jae-Do Song ◽  
Young-Hwan Ahn
Keyword(s):  
Price Discovery ◽  
Financial Burden ◽  
Simple Game ◽  
Market Price ◽  
Abatement Cost ◽  
Secondary Market ◽  
Marginal Abatement Cost ◽  
Analytical Models ◽  
Price Expectations ◽  
Explicit Consideration

A consignment auction aims to increase political feasibility by reducing the financial burden of initial permits allocation and to do the role of price discovery. However, previous analytical models presented contradictory results for the price discovery function of a consignment auction. Thus, this study reexamines whether a consignment auction can perform its price discovery function. The study uses a simple game model with several assumptions differentiated from previous analytical models: explicit consideration of the secondary market and firms as price-takers with various behaviors to respond to uncertainty about the price in the secondary market. Firms are classified into three types: speculators who seek arbitrage, doctrinarians who determine a permit demand based on an estimation of their marginal abatement cost, and neutralists who keep a permit demand the same as initial emission endowments. The results reveal that when a consignment auction was introduced, the expected equilibrium price was identical to that of the secondary market price, demonstrating that the auction could deliver the price discovery function. This is because speculators and doctrinarians provide information about their price expectations and marginal abatement cost through their estimated demand functions. Additionally, the smaller number of neutralists is, and the higher the risk-seeking propensity of speculators is, the more effective the price discovery function is.

scholarly journals A Study of the Feasibility of International ETS Cooperation between Shanghai and Korea from Environmental Efficiency and CO2 Marginal Abatement Cost Perspectives

2019 ◽  
Vol 11 (16) ◽  
pp. 4468 ◽  
Author(s):  
Chao Qi ◽  
Yongrok Choi
Keyword(s):  
Power Plants ◽  
Stochastic Frontier Analysis ◽  
Market Price ◽  
Abatement Cost ◽  
Environmental Efficiency ◽  
Marginal Abatement Cost ◽  
Cross Sectional ◽  
Frontier Analysis ◽  
The Impact ◽  
Feed In Tariff

With the worldwide spread of emissions trading schemes (ETSs) and the need for international cooperation on climate change, there is growing interest in linking ETSs. Along with sustainable development, preventing and controlling pollution, is now regarded as an urgent priority by China and Korea. In the context of the willingness of the Chinese and Korean governments to cooperate on ETS, this paper examines the feasibility of a pilot ETS cooperation between Shanghai and Korea from environmental efficiency and CO2 marginal abatement cost (MAC) perspectives. We apply a directional distance function (DDF) and stochastic frontier analysis (SFA) to estimate the environmental efficiency and the CO2 MAC of coal-fueled power plants in Shanghai and Korea using cross-sectional data from 2015. The results indicate that the group frontier environmental efficiency of Shanghai and Korea reached a similarly high score. However, as to meta-frontier environmental efficiency, the coal-fueled power plants in Korea performed better than those in Shanghai. The CO2 MAC results indicate that, despite the small gap in efficiency performance, the CO2 MAC of coal-fueled power plants is much higher than that in Shanghai due to the big feed-in tariff difference. This is because the MAC not only relates to the environmental efficiency, but also to the feed-in tariff. A higher feed-in tariff leads to higher MAC. To tackle this serious problem, which has also been addressed in previous studies, we suggest that policymakers should focus on the huge CO2 MAC differences caused by feed-in tariff differences to avoid equity problems when building the structure of the Shanghai-Korea ETS cooperation. For instance, compared with power plants in Shanghai, policymakers should set a looser cap and a higher offset for Korean plants. To reduce the impact of feed-in tariff on carbon trading in the market, it would also be effective to arrange a higher quota or a lower carbon tax for coal-fueled power plants in Korea. In addition, policymakers should fill the gaps of 85.15% and 67.6% between the realistic market price and the MAC results of coal-fueled power plants in Shanghai and Korea, respectively, by introducing stricter regulations.

Sectoral marginal abatement cost curves: implications for mitigation pledges and air pollution co-benefits for Annex I countries

2012 ◽  
Vol 7 (2) ◽  
pp. 169-184 ◽  
Author(s):  
Fabian Wagner ◽  
Markus Amann ◽  
Jens Borken-Kleefeld ◽  
Janusz Cofala ◽  
Lena Höglund-Isaksson ◽  
...  
Keyword(s):  
Air Pollution ◽  
Abatement Cost ◽  
Marginal Abatement Cost ◽  
Cost Curves

On the Impact of Innovation on the Marginal Abatement Cost Curve

2008 ◽  
Vol 10 (6) ◽  
pp. 985-1010 ◽  
Author(s):  
RABAH AMIR ◽  
MARC GERMAIN ◽  
VINCENT VAN STEENBERGHE
Keyword(s):  
Abatement Cost ◽  
Marginal Abatement Cost ◽  
Cost Curve ◽  
Marginal Abatement Cost Curve ◽  
The Impact

Marginal abatement cost curves for agricultural climate policy: State-of-the art, lessons learnt and future potential

2018 ◽  
Vol 182 ◽  
pp. 705-716 ◽  
Author(s):  
Vera Eory ◽  
Sylvain Pellerin ◽  
Gema Carmona Garcia ◽  
Heikki Lehtonen ◽  
Ieva Licite ◽  
...  
Keyword(s):  
Climate Policy ◽  
State Of The Art ◽  
Abatement Cost ◽  
Marginal Abatement Cost ◽  
Lessons Learnt ◽  
Cost Curves ◽  
Future Potential

scholarly journals An Equilibrium Analysis of a Secondary Mobile Data-Share Market

Information ◽  
2021 ◽  
Vol 12 (11) ◽  
pp. 434
Author(s):  
Jordan Blocher ◽  
Frederick C. Harris
Keyword(s):  
Data Exchange ◽  
Service Providers ◽  
Market Price ◽  
Secondary Market ◽  
Equilibrium Analysis ◽  
Response Strategy ◽  
Theoretic Approach ◽  
Exchange Market ◽  
Strategy Space ◽  
Wireless Users

Internet service providers are offering shared data plans where multiple users may buy and sell their overage data in a secondary market managed by the ISP. We propose a game-theoretic approach to a software-defined network for modeling this wireless data exchange market: a fully connected, non-cooperative network. We identify and define the rules for the underlying progressive second price (PSP) auction for the respective network and market structure. We allow for a single degree of statistical freedom—the reserve price—and show that the secondary data exchange market allows for greater flexibility in the acquisition decision making of mechanism design. We have designed a framework to optimize the strategy space using the elasticity of supply and demand. Wireless users are modeled as a distribution of buyers and sellers with normal incentives. Our derivation of a buyer-response strategy for wireless users based on second price market dynamics leads us to prove the existence of a balanced pricing scheme. We examine shifts in the market price function and prove that our network upholds the desired properties for optimization with respect to software-defined networks and prove the existence of a Nash equilibrium in the overlying non-cooperative game.

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