genco s integrated trading decision making to manage multimarket uncertainties fossil fuel generation companies gencos trade in multiple uncertain energy markets fuel and carbon markets on upstream side while electricity market on downstream side global economic and environmental benefits lead these markets to pursue overlapping goals making them highly interactive gencos may identify optimal trading strategies for upstream and downstream trading in an integrated framework to manage an overall secure and profitable position further severe unpredictability of energy market prices may necessitate a genco to make trading plans which perform better meeting its goals under severe uncertainty of involved markets this paper proposes information gap decision theory igdt based approach to select three interrelated trading portfolios in an integrated framework results from a realistic case study provide a comprehensive decision insight to address risk averse and risk seeking behavior of genco explicitly highlighting importance of co variation in prices of interactive markets

price setting supergames with capacity constraints this paper examines the role of industry capacity in enforcing collusion in the context of repeated games for a fixed capacity per firm it is shown that changes in the number of firms have a non monotone effect on the best enforceable cartel price this is due to the fact that while an additional firm lowers the share that each of the other firms enjoys at the collusive price it also increases the losses to each firm should the cartel fail

benchmarking in the european union emissions trading system abatement incentives abstract this paper investigates abatement incentives for allowance allocation based on output and sector specific benchmarks here called output based allocation or benchmarking special attention is given to updated allocation and we assume that allowances can be traded with other sectors open cap we confirm earlier studies that output based allocation based on ex ante data provide the same abatement incentives as auction or grandfathering and also confirm that output based allocation with updated output and ex ante benchmarks provides as high abatement incentives as auction but constitutes a production subsidy however we also find that benchmarking with updated output and updated benchmarks reduces abatement incentives somewhat but less so than updated grandfathering an allocation rule where the sector cap is prescribed ex ante for instance based on historic emissions and distributed to installations in proportion to their updated production preserves full abatement incentives and avoids some of the costs associated with the determination of benchmarks however this rule also constitutes a production subsidy which decreases with industry concentration if a sector is split into smaller groups each with one benchmark per sub sector benchmarking evolves toward grandfathering since benchmarking is conditioned on production this allocation method protects production from leakage i e migrating to areas where firms face no emissions cost this may actually be the most compelling reason for choosing benchmarking

analysis of the economic impact of different chinese climate policy options based on a cge model incorporating endogenous technological change abatement cost is the main concern for climate change mitigation and the key factor for mitigation cost is technological change this study established an integrated economic energy environmental dynamic computable general equilibrium cge model representing endogenous technological change for china s climate change policy analysis this study analyzed and compared the economic impact of different approaches to mitigation commitments as well as the potential role of technological change in the formulation of mitigation targets and commitments taking into account china s climate policy making needs based on the current international climate negotiation process the results show that absolute emission limits similar to the kyoto protocol will seriously impede the future economic development of china while the impact of an 80 reduction in carbon intensity forecast for 2050 based on the 2005 level is relatively small technological change can promote economic growth improve energy efficiency and reduce carbon intensity per unit of output through the substitution of production factors consequently it can reduce marginal abatement cost and related gdp loss by mitigation at the same time it can increase mitigation potentials and extend the emission reduction amount showing that consideration of the impact of technological change when deciding the emission reduction targets is necessary

bid rigging and the threat of government prosecution in this article i develop a simple bidding model in which collusion is endogenous buyers at a first price sealed bid auction decide whether to rig their bids given that they face the threat of government prosecution a legal authority chooses whether to investigate the buyers on the basis of the bids tendered in the unique sequential equilibrium of the game buyers rig their bids with positive probability but the legal authority can never ascertain on the basis of the bids alone that a conspiracy has formed

competition and cooperation in the workplace abstract this paper examines promotion systems which are competitive a tournament or noncompetitive a quota scheme we introduce helping technologies where some aid to co workers is efficient and consider various worker bargaining strategies it is shown that the competitive scheme consistently prevents helping efforts while the non competitive scheme induces an efficient allocation of effort if workers bargain over help because the non competitive scheme is less risky it may dominate the competitive scheme even if workers do not help each other if workers bargain over help the non competitive scheme will typically enhance welfare

estimating the price of tradable permits for greenhouse gas emissions in 2008 12 abstract many attempts have been made recently to predict the prices of tradable permits for greenhouse gas ghg emissions in the first commitment period of the kyoto protocol 2008 12 in this paper we attempt to refine these price estimates based on i the results of economic models and identification of factors which influence prices but are not fully reflected in the models ii lessons from price forecasting experience in the us sulfur dioxide market and iii current price data from the nascent international market for ghg permits we expect ghg permit prices to be at the lower end of the broad spectrum of existing predictions this implies among other things that resource transfers to developing countries associated with emissions trading will be relatively low nevertheless even a modest price will have a significant influence on the decisions of consumers and investors in energy markets around the world

the market for tradable ghg permits under the kyoto protocol a survey of model studies abstract this paper gathers results from 25 models of the market for tradable greenhouse gas ghg emission permits under the kyoto protocol due to diverging projections of emissions growth and different modeling approaches the model results differ substantially the average market volume is approximately 17 and 33 billion usd under global trading and annex b trading respectively including non carbon ghg lowers compliance costs and permit prices in the absence of the us permit demand roughly equals hot air from the former soviet union these countries can increase their revenues from selling permits by restricting supply which raises the permit price

the impact of china s carbon allowance allocation rules on the product prices and emission reduction behaviors of ets covered enterprises abstract it is an important task for china to allocate carbon emission allowance to realize its carbon reduction target and establish carbon trading market china has designed several allocation rules within seven pilot regions what influence those rules may cause is closely related with the enthusiasm of emission trading scheme ets covered enterprises participation in carbon market and more importantly with the mechanism design and sustainable development of carbon market for this purpose the multi stage profit model is developed to analyze the ets covered enterprises product prices and emission reduction behaviors under different allocation rules the results show that first under the rules of grandfathering self declaration and auctioning when deciding the optimal product price and optimal carbon emission reduction those enterprises may focus on maximizing current stage profit however under the rule of benchmarking those enterprises may care more about the impact of current decisions on the profit in next stage second the optimal product price policy is positively correlated with the price of the same kind products consumers low carbon awareness and government subsidy finally along with the increase of carbon price consumers low carbon awareness and government subsidy and the decrease of carbon emission cap those enterprises tend to reduce carbon emissions

risk constrained self scheduling of hydro wind units for short term electricity markets considering intermittency and uncertainty abstract in view of the intermittency and uncertainty associated with both the electricity production sector of restructured power system and their competitive markets it is necessary to develop an appropriate risk managing scheme so that it is desirable to trade off between optimum utilization of intermittent generation resources i e renewable energy resources uncertain market prices and related risks in order to maximize participants benefits and minimize the corresponding risks in the multi product market environment the main goal of this paper is to investigate risk management by introducing a novel multi risk index to quantify expected downside risk edr which is caused by both the wind power and market price uncertainties value at risk var method is used to assess the mentioned risk issue by the proposed weighted edr so that an optimal trade off between the profit and risk is made for the system operations also the roulette wheel mechanism is employed for random market price scenario generation wherein the stochastic procedure is converted into its respective deterministic equivalents moreover the autoregressive integrated moving average arima model is employed to characterize the stochastic wind farm wf generation by predetermined mean level and standard deviation of wind behavior as well as temporal correlation the problem is formulated as a mixed integer stochastic framework for a hydro wind power system scheduling and tested on a generation company genco

designing an emissions trading scheme for china an up to date climate policy assessment abstract we assess recent chinese climate policy proposals in a multi region multi sector computable general equilibrium model with a chinese carbon emissions trading scheme ets when the emissions intensity per gdp in 2020 is required to be 45 lower than in 2005 the model simulations indicate that the climate policy induced welfare loss in 2020 measured as the level of gdp and welfare in 2020 under climate policy relative to their level under business as usual bau in the same year is about 1 the chinese welfare loss in 2020 slightly increases in the chinese rate of economic growth in 2020 when keeping the emissions target fixed at the 2020 level after 2020 in absolute terms the welfare loss will reach about 2 in 2030 if china s annual economic growth rate is 0 5 percentage points higher lower the climate policy induced welfare loss in 2030 will rise decline by about 0 5 percentage points full auctioning of carbon allowances results in very similar macroeconomic effects as free allocation but full auctioning leads to higher reductions in output than free allocation for ets sectors linking the chinese to the european ets and restricting the transfer volume to one third of the eu s reduction effort creates at best a small benefit for china yet with smaller sectoral output reductions than auctioning these results highlight the importance of designing the chinese ets wisely

the impacts of china s household consumption expenditure patterns on energy demand and carbon emissions towards 2050 abstract this paper explores how china s household consumption patterns over the period 2005 2050 influence the total energy demand and carbon dioxide co2 emissions in two baseline scenarios and how it influences carbon prices as well as the economic cost in the corresponding carbon mitigation scenarios to this end we first put forward two possible household consumption expenditure patterns up to 2050 using the working leser model taking into account total expenditure increase and urbanization for comparison both expenditure patterns are then incorporated in a hybrid recursive dynamic computable general equilibrium model the results reveal that as income level increases in the coming decades the direct and indirect household energy requirements and co2 emissions would rise drastically when household expenditure shifts from material products and transport to service oriented goods around 21 000 mtce 1 of primary energy and 45 billion tons of co2 emissions would be saved over the 45 year period from 2005 to 2050 moreover carbon prices in the dematerialized mitigation scenario would fall by 13 in 2050 thus reducing the economic cost

eu climate policy up to 2020 an economic impact assessment in its fight against climate change the eu is committed to reducing its overall greenhouse gas emissions to at least 20 below 1990 levels by 2020 to meet this commitment the eu builds on segmented market regulation with an eu wide cap and trade system for emissions from energy intensive installations ets sectors and additional measures by each eu member state covering emission sources outside the cap and trade system the non ets sector furthermore the eu has launched additional policy measures such as renewable energy subsidies in order to promote compliance with the climate policy target basic economic reasoning suggests that emission market segmentation and overlapping regulation can create substantial excess costs if we focus only on the climate policy target in this paper we evaluate the economic impacts of eu climate policy based on numerical simulations with a computable general equilibrium model of international trade and energy use our results highlight the importance of initial market distortions and imperfections as well as alternative baseline projections for the appropriate assessment of eu compliance cost

carbon emissions trading scheme exploration in china a multi agent based model abstract to develop a low carbon economy china launched seven pilot programs for carbon emissions trading cet in 2011 and plans to establish a nationwide cet mechanism in 2015 this paper formulated a multi agent based model to investigate the impacts of different cet designs in order to find the most appropriate one for china the proposed bottom up model includes all main economic agents in a general equilibrium framework the simulation results indicate that 1 cet would effectively reduce carbon emissions with a certain negative impact on the economy 2 as for allowance allocation the grandfathering rule is relatively moderate while the benchmarking rule is more aggressive 3 as for the carbon price when the price level in the secondary cet market is regulated to be around rmb 40 per metric ton a satisfactory emission mitigation effect can be obtained 4 the penalty rate is suggested to be carefully designed to balance the economy development and mitigation effect and 5 subsidy policy for energy technology improvement can effectively reduce carbon emissions without an additional negative impact on the economy the results also indicate that the proposed novel model is a promising tool for cet policy making and analyses

collusion in uniform price auctions experimental evidence and implications for treasury auctions in uniform price auctions of shares there exist collusive equilibria in which bidders capture the entire surplus from the auction as well as competitive equilibria in which the auctioneer captures the entire surplus from the auction we provide experimental evidence that in uniform price auctions non binding pre play communication facilitates convergence to collusive equilibrium outcomes on the other hand regardless of the opportunities for communication in discriminatory auction experiments subject strategies conform closely with the unique equilibrium in undominated strategies in which bidders gains are equal to the smallest tick size in the bidding schedule this evidence suggests that uniform price auctions of treasury securities may result in lower revenues than the currently employed discriminatory procedure

regional differences in china s co2 abatement cost abstract under a framework of output distance function with multiple outputs the study discusses the carbon abatement cost at provincial and regional levels in china using the shadow price analysis the findings show that the abatement cost reflecting the marginal opportunity cost of carbon reduction varies greatly among the provinces on average the abatement cost of the eastern region was much higher than that of the mid western region during the observed period the findings provide evidence that the carbon prices in the current ets pilots have been much lower than desired levels implying inefficiency of the markets the wide range of the abatement cost estimates supports that the equi marginal principle does not hold for the regulations on carbon pollution at regional levels the regional cost differences indicate the huge potential for china to minimize the total abatement cost with policy instruments that may motive the emissions moving from areas of low abatement cost to where the abatement cost is higher for a few undeveloped provinces that are environmentally fragile and have high abatement cost supplementary measures will be needed to reduce the negative impact of carbon cutbacks on the poor to the minimum

integrated risk management for an electricity producer abstract electricity suppliers face two sources of risk uncertainty of spot prices and uncertainty of production costs uncertainty in selling the output is usually solved by signing forwards and the two sources of risk are dealt with separately however managing the integrated risk optimally is the direction we will suggest we intend to analyse the problem a power producer is confronted to upon acting in a market where spot and forward agreements are available since forwards allow to sell production in advance at a given price but do not hedge against cost volatility the total risk can be reduced by selling also in the spot market the analysis is further detailed to encompass the spread option inherent in electricity production we find a benchmark value for forwards to sign and the optimal spot forward combinations the analysis is carried out by accounting for market figures for input and output variables in the german market eex

optimal tournament contracts for heterogeneous workers abstract we consider a rank order tournament between workers with different abilities under malcomson s self commitment property the employer optimally uses individual tournament prizes to extract rents from the workers without the self commitment property individual prizes are used to make the asymmetric competition less uneven by discriminating against the more able worker i e he is offered a lower winner prize than the less able worker in this spirit individual prizes serve as a substitute for handicaps

collusive pricing with capacity constraints in the presence of demand uncertainty we explore the response of collusive prices to changing demand conditions when firms operate under capacity constraints in the presence of demand uncertainty we find support for the conventional view that periods of low demand lead through the emergence of excess capacity to a breakdown of collusive pricing we also find that the nature of price wars depends on the degree of excess capacity in the industry while small amounts of excess capacity can lead firms to engage in mild price wars characterized by uniform price reductions and market share stability more severe price wars characterized by price undercutting and market share instability can emerge if excess capacity is sufficiently great finally our results lend support to the view that market share instability is a symptom of ineffective collusion

a new index for electricity spot markets abstract different indexes are used in electricity markets worldwide to represent the daily behavior of spot prices however the peculiarities of these markets require a careful choice of the index based on mathematical formulation and its statistical properties choosing a bad index may influence the financial policies of market players since derivative pricing and hedging performance can be deeply affected in this paper with an initial theoretical analysis we intend to show that the most widely used indexes simple arithmetic average and weighted average with current volumes are poor representatives of the spot market we will then perform an analysis of the hedging strategy on a derivative instrument an asian option written on a reference index the resulting simulations applied to omel spain and eex germany are sufficiently clear cut to suggest that the decision to adopt an index to represent properly a market must be taken very carefully finally we will propose a new index fast index and after comparing it with the previous indexes will show that both theoretically and practically this index can be taken as a good electricity market synthetic indicator

pay equality and industrial politics personnel managers often argue that equitable pay treatment manifested as wage compression is useful because it reduces disharmony among workers but it is far from obvious that a compressed salary structure is morale improving since better workers may feel disenchanted by this scheme however when workers rewards are based on relative comparisons salary compression reduces uncooperative behavior that is detrimental to the firm relative comparisons imply that some reference group must be selected the major result is that within the relevant groups some wage compression is efficient

weekly self scheduling forward contracting and pool involvement for an electricity producer an adaptive robust optimization approach abstract this paper addresses the optimization under uncertainty of the self scheduling forward contracting and pool involvement of an electricity producer operating a mixed power generation station which combines thermal hydro and wind sources and uses a two stage adaptive robust optimization approach in this problem the wind power production and the electricity pool price are considered to be uncertain and are described by uncertainty convex sets to solve this problem two variants of a constraint generation algorithm are proposed and their application and characteristics discussed both algorithms are used to solve two case studies based on two producers each operating equivalent generation units differing only in the thermal units characteristics their market strategies are investigated for three different scenarios corresponding to as many instances of electricity price forecasts the effect of the producers approach whether conservative or more risk prone is also investigated by solving each instance for multiple values of the so called budget parameter it was possible to conclude that this parameter influences markedly the producers strategy in terms of scheduling profit forward contracting and pool involvement these findings are presented and analyzed in detail and an attempted rationale is proposed to explain the less intuitive outcomes regarding the computational results these show that for some instances the two variants of the algorithms have a similar performance while for a particular subset of them one variant has a clear superiority

managerial objectives capital structure and the provision of worker incentives worker incentive schemes are invariably assumed to be administered by an owner entrepreneur who has an incentive to understate worker performance after the event while tournaments can overcome this problem they discourage cooperation between workers we show that a professional manager concerned with equality between workers and with avoiding bankruptcy rather than maximizing shareholder wealth will conduct a tournament that preserves individual effort incentives while promoting cooperation between workers the theory predicts lower debt levels and more compressed pay scales as cooperation becomes more important in the limit this becomes a group bonus scheme supported by blue chip debt

the emissions trading paradox abstract this article considers the price history of co2 allowances in the eu emission trading scheme since european emissions trading started in 2005 the prices of allowances have varied between less than one and thirty euro per ton of co2 this previously unpredicted volatility and more notably a significant price crash in may 2005 led to the hypothesis that electricity producers might use their market power to influence the prices of allowances besides market power the combination of information asymmetry and price interdependencies between prices of primary goods especially electricity and allowances plays an important role in explaining the emissions trading paradox the model presented will show that banking can lead to such a price crash if market participators act rationally furthermore in such a scenario banking can be profitable for sellers at the cost of buyers

bidder collusion at forest service timber sales allegations of bidder collusion at forest service timber sales in the pacific northwest were common in the 1970s of course prices may be low for reasons other than collusion we formulate an empirical model that allows for both bidder collusion and supply effects and in which we control for demand conditions noncooperative behavior in which a single unit is sold the standard auction model is a special case it is found to be definitively outperformed by a model of collusion we also find that supply effects are dominated by collusion in determining the winning bids in the market

technology choice relative performance pay and worker heterogeneity abstract we identify a new problem that may arise when heterogeneous workers are motivated by relative performance pay if workers abilities and the production technology are complements the firm may prefer not to adopt a more advanced technology even though this technology would costlessly increase each worker s productivity due to the complementarity between ability and technology under technology adoption the productivity of a more able worker increases more strongly than the productivity of a less able colleague as a consequence both workers motivation to exert effort is reduced we show that this adverse incentive effect is dominant and consequently keeps the firm from introducing a better production technology if talent uncertainty is sufficiently high and or monitoring of workers is sufficiently precise

a collective tournament abstract traditional tournaments among workers yield suboptimal levels of helping efforts while collective incentives generate free riding or lack incentive compatibility we confront these problems using a tournament between workplaces under fairly restrictive conditions the collective tournament is first best and incentive compatible

the moral hazard of budget breaking it has recently been suggested in the agency literature that moral hazard in teams can be dealt with by introducing a third party who breaks the budget balancing constraint and that this facilitates the design of contracts that can sustain the pareto optimum as a perfect nash equilibrium this note offers an explanation for why the use of budget breaking schemes is not so widespread as that of active monitoring despite the fact that such schemes would save the resources expended on supervision the note demonstrates that allowing the budget to be broken introduces the potential for moral hazard on the part of the third party which could render the proposed equilibrium incredible

gains from emission trading under multiple stabilization targets and technological constraints abstract this study quantified the effectiveness of emission trading by considering multiple technological constraints burden sharing schemes and climate stabilization targets we used a global computable general equilibrium model and evaluated the effectiveness of emission trading using welfare losses associated with climate mitigation for scenarios with and without emission trading as measured by the hicksian equivalent variation hev we found that emission trading contributed to a reduction in the economic losses associated with climate mitigation for all technological assumptions burden sharing schemes and stabilization targets the net global welfare losses in scenarios without emission trading ranged between 0 7 and 1 9 whereas emission trading reduced the losses by 0 1 to 0 5 the range depended on the assumptions in the burden sharing schemes technological constraints and stabilization targets the percentage change in welfare gain from emission trading varied regionally and was relatively high in low income or middle income countries 0 2 to 1 0 and 0 1 to 1 2 respectively compared to high income countries 0 1 to 0 3 some regions displayed negative values with regard to the effectiveness of emission trading which might be due to the change in goods and service trades associated with emission trading if the usage of carbon capture and storage was constrained welfare loss became large and the effectiveness of emission trading ultimately increased the use of a burden sharing scheme was a significant factor in changing the effectiveness of emission trading and the per capita emission convergence in 2050 was more effective for emission trading than a per income convergence

second price auction tournament abstract we compare bidding behavior in a standard second price auction and a second price auction tournament without information on relative rankings our results suggest that people bid more sincerely in the tournament setting with a non linear payoff schedule and incomplete information

a new solution for the moral hazard problem in team production we propose an intergroup competition scheme ics to theoretically solve free riding in team production and provide experimental evidence from a voluntary contribution mechanism public goods game the ics includes an internal transfer payment from the lowest to highest contributing team proportional to the difference in group contributions the ics requires minimal information makes the efficient contribution a dominant strategy and is budget balanced these features make the ics ideally suited to solve the moral hazard problem in team production our experiment demonstrates that the ics raises contributions to almost reach optimality with the appropriate parameters we also show experimentally that the success of the ics can be primarily attributed to the effect of higher returns and to the introduction of competition and it is not due to the introduction of potential losses or information regarding other groups data as supplemental material are available at http dx doi org 10 1287 mnsc 2014 1922

tacit collusion in repeated auctions uniform versus discriminatory within an infinitely repeated game i compare the level and conduct of collusion under uniform and discriminatory auctions for this purpose i characterize the optimal collusive schemes and sets of sustainable profits under these auction formats i show that uniform auctions facilitate collusion more than discriminatory auctions the optimal penal code is equally severe under the two formats but bidders deviation incentives are weaker in uniform auctions given that the payoff irrelevant bids can be used to relax the enforcement problem this discussion is particularly relevant after the recent reforms in the electricity industry in england wales and elsewhere

the eu decarbonisation roadmap 2050 what way to walk we carry out a detailed cge computable general equilibrium analysis of the eu decarbonisation roadmap 2050 on a macroeconomic and on a sectoral level herein we study a reference scenario that implements existing eu policies as well as 3 unilateral and 3 global climate action scenarios we identify global climate action with international emissions trading and the full equalization of co2 prices across all eu sectors as a reasonable policy option to avoid additional costs of the decarbonisation roadmap to a large extent this policy option may include cdm clean development mechanism in the sense of where flexibility in an extended form if there are countries without emissions caps moreover we identify diverse sectoral effects in terms of output investment emissions and international competitiveness we conclude that the successful realization of the eu decarbonisation roadmap probably requires a wise and joint consideration of technology policy design and sectoral aspects

the eu 20 20 2020 targets an overview of the emf22 assessment three computable general equilibrium models are used to estimate the economic implications of a stylized version of eu climate policy if implemented at the lowest possible cost the 20 emissions reduction would lead to a welfare loss of 0 5 2 0 by 2020 second best policies increase costs a policy with two carbon prices one for the ets one for the non ets could increase costs by up to 50 a policy with 28 carbon prices one for the ets one each for each member state could increase costs by another 40 the renewables standard could raise the costs of emissions reduction by 90 overall the inefficiencies in policy lead to a cost that is 100 125 too high the models differ greatly in the detail of their results the ets non ets split may have a negligible impact on welfare while the renewables standard may even improve welfare the models agree however that the distortions introduced by total eu package imply a substantial welfare loss over and above the costs needed to meet the climate target the marginal total and excess costs reported here are notably higher than those in the impact assessment of the european commission

assessment of china s climate commitment and non fossil energy plan towards 2020 using hybrid aim cge model china made a commitment in copenhagen to reduce its carbon dioxide emissions per unit of gdp from 40 to 45 compared with the 2005 level by 2020 and is determined to vigorously develop non fossil fuels this study analyzes the effects and impacts of policies that could help to achieve china s copenhagen commitments with a hybrid static cge model in which the electricity sector is disaggregated into 12 generation technologies four scenarios are developed including the reference scenario a the reference scenario b and two carbon constraint scenarios the results show that carbon intensity in terms of gdp will fall by 30 97 between 2005 and 2020 in the reference scenario a and will be reduced further by 7 97 if china s targeted non fossil energy development plans can be achieved in the reference scenario b however the rest of the 40 45 target must be realized by other measures such as carbon constraint it is also observed that due to carbon intensity constraints gdp loss would be from 0 032 to 0 24 compared to the reference scenario b and co2 emission reductions are due mainly to decreases in coal consumption in the electricity sector and manufacturing sector

aligning renewable energy targets with carbon emissions trading to achieve china s indcs a general equilibrium assessment abstract this study evaluates the economic impact of achieving china s intended nationally determined contributions indcs through emissions trading scheme ets and renewable energy policy using a computable general equilibrium cge model we explored the behavior of different sectors in the carbon market carbon trade amount carbon price and the economic impact of an emissions cap and trade on the employment and gdp the results demonstrate that the electricity and aviation sectors have relatively higher mitigation costs and tend to be the main buyers of the carbon credits whereas chemicals nonmetal production iron and steel paper and other manufacturing sectors have relatively lower mitigation costs and tend to be the main sellers carbon trading price and market scale are closely related to various factors such as the emissions quota allocation scheme among sectors coverage of participating sectors and the level of renewable energy development emission trading is also confirmed to be an economically efficient approach that contributes to the achievement of emission reduction targets with less economic cost in order to make full use of this approach policy maker should assign an appropriate emissions quota allocation scheme extend coverage of various sectors and promote the expansion of low carbon technologies such as renewable energy

spatial dependencies of wind power and interrelations with spot price dynamics abstract wind power has seen strong growth over the last decade and increasingly affects electricity spot prices in particular prices are more volatile due to the stochastic nature of wind such that more generation of wind energy yields lower prices therefore it is important to assess the value of wind power at different locations not only for an investor but for the electricity system as a whole in this paper we develop a stochastic simulation model that captures the full spatial dependence structure of wind power by using copulas incorporated into a supply and demand based model for the electricity spot price this model is calibrated with german data we find that the specific location of a turbine i e its spatial dependence with respect to the aggregated wind power in the system is of high relevance for its value many of the locations analyzed show an upper tail dependence that adversely impacts the market value therefore a model that assumes a linear dependence structure would systematically overestimate the market value of wind power in many cases this effect becomes more important for increasing levels of wind power penetration and may render the large scale integration into markets more difficult

free euas and fuel switching abstract this paper focuses on the impact of euas on the optimal policy of a competitive electricity producer the effect of grandfathering is consistently shown to introduce significant distortions to the system it is theoretically shown that there is a threshold value of carbon price so that for prices above this the eua becomes an incentive for reduced production rather than a penalty for inefficient producers these theoretical results are supported by the data of one producer from italy and one from germany furthermore the empirical evidence concludes that the high level of free allowances may generate a shift in production from less to more polluting technologies

the hedge value of international emissions trading under uncertainty this paper estimates the value of international emissions trading focusing on a here to fore neglected component its value as a hedge against uncertainty much analysis has been done of the kyoto protocol and other potential international greenhouse gas mitigation policies comparing the costs of achieving emission targets with and without trading these studies often show large cost reductions for all parties under trading compared to a no trading case we investigate the welfare gains of including emissions trading in the presence of uncertainty in economic growth rates using both a partial equilibrium model based on marginal abatement cost curves and a computable general equilibrium model we find that the hedge value of international trading is small relative to its value in reallocating emissions reductions when the burden sharing scheme does not resemble a least cost allocation we also find that the effects of pre existing tax distortions and terms of trade dominate the hedge value of trading we conclude that the primary value of emissions trading in international agreements is as a burden sharing or wealth transfer mechanism and should be judged accordingly

discriminatory versus uniform treasury auctions evidence from when issued transactions abstract we use when issued transactions data to assess the treasury s current experiment with uniform auctions when issued volume is higher under uniform as compared to discriminatory auctions suggesting a higher information release which should reduce pre auction uncertainty and the winner s curse under uniform auctions when issued volatility falls after the auction and again after the outcome announcement the pattern is the opposite for discriminatory auctions this is further evidence that uniform auctions increase pre auction information and lower the short squeeze a direct comparison of markups in uniform and discriminatory auctions yields mixed results

advancing the experiment to reality perspectives on shanghai pilot carbon emissions trading scheme shanghai as the most advanced mega city in china has launched a pilot carbon emission trading scheme sh ets that is designed to achieve a compromise between the domestic context in shanghai and a need for national policy appeal this paper gives an overview of the latest progress of the sh ets and sheds some light on the features of key design components such as the threshold for inclusion sector coverage cap setting allowance allocation and the monitoring reporting and verification mrv system based on a concern that manipulative principles and economic dynamics may lead to uncertainties and ultimately influence the emission reduction effect of the scheme this paper conducts an evaluation of potential uncertainties such as those caused by changes in patterns of economic growth strategic trading activities related to the bankable allowances carbon leakage risks and insufficient mrv capabilities to advance the experiment to reality this paper suggests some changes are made to the pilot which include adjusting the allowance allocation principles to facilitate change in the domestic energy structure improving the disclosure of emission data to guarantee information symmetry gauging the carbon leakage risks to strengthen compliance and introducing risk management for non regulated players and derivatives products

quantifying regional economic impacts of co2 intensity targets in china we acknowledge the support of the ministry of science and technology of china through the institute for energy environment and economy at tsinghua university and the support from graduate school of tsinghua university which is supporting zhang da s doctoral research as a 22 visiting scholar at the massachusetts institute of technology we are also grateful for the support provided by rio tinto china and social science key research program from national social science foundation china of grant no 09 zd029 we further acknowledge the support of eni s p a icf international and shell founding sponsors of the china energy and climate project for supporting this model development work we would further like to thank dr john reilly dr sergey paltsev dr kyung min nam dr henry chen paul kishimoto and tianyu qi at joint program on the science and policy of global change and participants in the annual meeting of china energy and climate project and ecomod 2012 conference for helpful comments and discussion 23

optimal penal codes in price setting supergames with capacity constraints this paper constructs optimal pure strategy penal codes for a broad class of symmetric bertrand supergames with capacity constraints the results should simplify the analysis of bertrand supergames because the punishments comprising the penal codes constructed below have a very simple form and the associated payoffs are often easy to calculate it is also shown that for a commonly employed subclass of the games considered the admission of mixed strategies does not allow severer punishments the analysis draws heavily on the pathbreaking work of abreu 1984 he demonstrated that in the search for optimal penal codes attention can be restricted to simple penal codes simple penal codes are characterized by a vector of outcome paths one for each player the ith outcome path is interpreted as the punishment to be imposed on the ith player if he deviates from the equilibrium path or from any punishment path section 2 explains the basic framework of analysis the class of bertrand games studied is very general no particular rationing rule is imposed some mild restrictions are placed on the firms sales functions instead the commonly used models of levitan and shubik 1972 and beckman 1965 are special cases of the games analysed below it is assumed throughout that there is a price firms can be induced to charge if the punishment for charging a different price gives the offending firm a payoff equal to its security level for the supergame thus either there must exist a static nash equilibrium in pure strategies or else the discount factor must not be too close to zero in section 3 optimal penal codes are constructed and it is established that the punishments comprising them always drive punished firms to their security levels the arguments employed make clear that optimal penal codes are not generally unique this issue is addressed in section 4 where it is also shown that the levitan shubik rationing rule exhibits more types of optimal penal codes than do other rules in particular if the levitan shubik rule is employed then punishments that are analogous to abreu s 1986 symmetric two phase punishments for cournot games can be used to construct optimal penal codes in bertrand games this property does not hold generally however