This paper contributes to the literature on market power in emissions permits markets, modeling an emissions trading scheme in which polluters differ with respect to their marginal abatement costs at the business-as-usual emissions. The polluters play a two-stage static complete information game...

This paper contributes to the literature in market power for emissions permits, modeling an emissions trading scheme in which polluters differ only in their business-as-usual emissions. They play a two-stage static complete information game in which their market power arises endogenously from...

I propose an emissions trading scheme which mimics the upcoming third phase design of the European Union Emissions Trading Scheme, with auction as initial allocation method. Risk-averse polluters and speculators, participating in the scheme, respond idiosyncratically to an economy-wide shock. I...