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This paper examines price bubbles in the relatively new carbon emission trading scheme of Beijing carbon market by employing a recently proposed econometric test which can stamp the occurrence and burst of financial bubbles. We find multiple bubbles in Beijing carbon market over the sample period between January 2014 to April 2018, and that the occurrences of carbon price bubbles are closely related to the announcements of environmental policies by the Chinese government. Comparing our results to the EU ETS, we find that the volatility of carbon price in Beijing market is higher than EU, and interestingly, the bubbles in Beijing market occur when the price volatility is relatively low, while in EU market the bubbles correspond to the peaks of volatility. Our empirical results provide insightful policy implications in the context of the actual China's carbon market reform. To achieve effective stabilization of carbon price, policymakers should publicize alert notifications of the price fluctuations, and strengthen the carbon markets supervision and promote its improvement. [ABSTRACT FROM AUTHOR]

The integration or segmentation of regional carbon prices implies that barriers may hinder prices from adjusting efficiently and impede linkages between regional carbon markets. Past studies have found that crossregional carbon prices in China tend to diverge, indicating unbalanced regional markets and that carbon cap-and-trade policies may be insufficiently effective. China's carbon trading pilots opened in 2013. Is the integration efficient? This is the research question addressed in this study. This paper uses the carbon prices of four carbon-trading pilot regions in China (i.e. Beijing, Shanghai, Tianjin, and Guangdong) over the period of January 1, 2014, to March 23, 2021, to explore whether prices are correlated across three dimensions: long-term convergence, short-term correlation, and volatility transmission by adopting a vector error correction model with heterogeneous variances. And by using longer-term daily data and empirical tests that can account for the multiple-faceted correlations, this paper provides evidence showing that long-term convergence and risk transfer between the four regional carbon prices exist, which indicates significant regional integration. The results indicate that the price behavior of the Beijing pilot is efficient and that the Shanghai pilot has the lowest volatility. The paper also documents an information transfer pattern. For example, the Beijing pilot is shown to be the leading risk transfer market, whereas the Shanghai pilot is shown to be the market where most risk is transferred. Contrary to findings elsewhere, our main results demonstrate that China's carbon markets exhibit integration efficiency and no imbalance between regions. This may be because the efficiency of China's carbon markets has improved over time. The evidence also implies that if a multi-dimensional correlation has not been considered, it may underestimate the efficiency of regional carbon prices' integration. [ABSTRACT FROM AUTHOR]