Emissions Permits Markets and Dominant Firms

• Manel Antelo ^[1] ; Lluis Bru ^[2]
  1. [1] Universidade de Santiago de Compostela

     Universidade de Santiago de Compostela

     Santiago de Compostela, España

     
  2. [2] Universitat de les Illes Balears

     Universitat de les Illes Balears

     Palma de Mallorca, España

     
• Localización: Documentos de Traballo. Análise Económica, ISSN 1138-0713, Nº. 31, 2004, págs. 1-40
• Idioma: inglés
• Texto completo no disponible (Saber más ...)
• Resumen

  • In this paper, the implementation of some schemes proposed in the literature for allocating emissions permits among pollutant firms, given a cap on total national emissions, is examined in the context of firms exerting market power in the (intermediate) emissions permits market. For that, we propose a partial equilibrium analysis with a government, consumers, and firms -one firm being a dominant firm with market power in the intermediate emissions permits market, and the rest of firms being competitive in such market. We find that the presence of a dominant firm in the intermediate emissions permits market generates an additional externality, and that a secondary market of emissions permits (in addition to a previous auction) does not solve such inefficiency. The context in which the dominant firm is "removed from the emissions permits market" by a (tax collector) government to obtain its permits through bilateral bargaining with the government rather than through the market is also explored.