Before revision:  We conjecture that this price exuberance could either be caused by an adaption process or an overreaction of prices to the announcement of the reform. In addition, we revisit the effects of fundamental price drivers, such as coal prices, gas prices and measures of economic activity, on allowance prices in the EU ETS using a time-varying coefficient regression model .
After revision:  We conjecture that this price exuberance could either be caused by an adaption process , or be an indicator for market exuberance during the inflationary phase of a bubble. Testing for the former, we neither find that abatement-related fundamentals display equally explosive behavior, nor a change in coefficients using a complementary time-varying coefficient regression model .