Dynamic Competition under Cap and Trade Programs
Greenhouse gases (GHG), like carbon dioxide (CO(2)), which are released in the atmosphere due to anthropogenic activities like power production, are now accepted as the main culprits for global warming. The Regional Greenhouse Gas Initiative (RGGI), an initiative of the north-east and mid-Atlantic States of the US for limiting the emission of GHG, has proposed a regional cap-and-trade program for CO(2) emissions for power plants. This forthcoming emissions market is expected to have a major impact on the developing deregulated wholesale electricity markets. Our goal is to model and study the interaction of these two markets and to assess the impact of the emissions market on wholesale electricity prices.
rggi electricity markets dynamic games greenhouse emissions cap and trade markets