Market Power, Intertemporal Permits Trading, and Economic Efficiency

The banking and borrowing (BB) system has been developed gradually in the tradable permits market to perform a role as an environmental management tool. One question naturally arises how it will impact behaviors of firms efficiency presence power market. This paper considers two cases: with without BB system. equilibrium are identified cases. findings show that producing discharging depend on price elasticity output system, while they only growth rate Although both cases fail obtain efficient solutions, is capable alleviating inefficiency arising from compared path satisfies Hotelling rule case closely related