Cap and trade mechanisms enjoy increasing importance in environmental legislations worldwide. One of the important aspects of designing cap and trade mechanisms is the possibility of authorities to grant emission permits for free. Unlike analyzed in the seminal contributions on cap and trade...

Cap and trade mechanisms enjoy increasing importance in environmental legislations worldwide. One of the important aspects of designing cap and trade mechanisms is the possibility of authorities to grant emission permits for free. Unlike analyzed in the seminal contributions on cap and trade...

We analyze a market game where firms choose capacities under uncertainty about future market conditions and make output choices after uncertainty has unraveled. We show existence and uniqueness of equilibrium under imperfect competition and establish that capacity choices by strategic firms are...

We analyze the impact of a uniform price cap at electricity spot markets on firms investment decisions and on welfare. Since investment decisions for those markets are taken in the long run, fluctuating demand at the spot market eventually gives rise to high price spikes in case of binding...

We analyze a market game where firms choose capacities under uncertainty about future market conditions and make output choices after uncertainty has unraveled. We show existence and uniqueness of equilibrium under imperfect competition and provide an intuitive characterization of equilibrium...

In this paper we analyze incentives to invest in capacity prior to a sequence of Cournot spot markets with varying demand. We compare equilibrium investment in the absence and in presence of the possibility to trade on forward markets. We find that the access to strategic devices (such as...

In this paper we analyze incentives to invest in capacity prior to asequence of Cournot spot markets with varying demand. We compareequilibrium investment in the absence and in presence of the possibility to tradeon forward markets. We find that the possibility to trade forwards...