The European Union Emission Trading Scheme is the largest market mechanism yet implemented to spur emissions reduction. In the scheme emissions certificates are traded within annual periods to compensate for the total emissions of given companies. The rules for how certificates can be passed...

In commodity markets, a trader selling her inventory over a finite time horizon has access not only to the spot market but also to forward contracts. The trader has the choice to sell at the spot price, or to short a forward contract for later delivery, or a combination of both. While the...