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Market Power with Tradable Performance-Based CO2 Emission Standards in the Electricity Sector.
- Source :
-
Energy Journal . Nov2018, Vol. 39 Issue 6, p121-145. 25p. - Publication Year :
- 2018
-
Abstract
- The U.S. Clean Power Plan stipulates a state-specific performance-based CO2 emission standard, delegating states with considerable flexibility for using either a tradable performance-based or a mass-based permit program. This paper analyzes these two standards under imperfect competitive. We limit our attention to (1) short-run analyses and (2) a situation in which all states are subject to the same type of standard. We show that while the cross-subsidy inherent in the performance- based standard might effectively reduce power prices, it could also inflate energy consumption. A dominant firm with a relatively clean endowment under the performance-based standard would be able to manipulate the electricity market as well as to elevate permit prices, which might worsen market outcomes compared to its mass-based counterpart. On the other hand, the "cross-subsidy" could be the dominant force leading to a higher social welfare if the leader has a relatively dirty endowment. [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 01956574
- Volume :
- 39
- Issue :
- 6
- Database :
- Academic Search Index
- Journal :
- Energy Journal
- Publication Type :
- Academic Journal
- Accession number :
- 133029731
- Full Text :
- https://doi.org/10.5547/01956574.39.6.yche