Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/260449 
Year of Publication: 
2018
Series/Report no.: 
WiSo-HH Working Paper Series No. 46
Publisher: 
Universität Hamburg, Fakultät für Wirtschafts- und Sozialwissenschaften, WiSo-Forschungslabor, Hamburg
Abstract: 
The latest reform of the European Emissions Trading System (EU ETS) will set in mo- tion range of changes to the scheme including the Market Stability Reserve (MSR). It will postpone the issue date of allowances as a function of the unused allwances in circulation, i.e. the so-called 'surplus', and cancel allowances as a function of the reserve size from 2023 onwards. Both aspects of the MSR have implications for market outcomes which in turn depend on the nature of foresight experienced by market participants. We distin- guish between perfect, limited and imperfect foresight and analyze a perfectly competitive allowance market by a partial equilibrium model in discrete time. Our investigation yields that the current design put in place by the reform is only sensible if two market fail- ures are taken into account: excessive supply by the regulator and regulated entities not experiencing perfect foresight.
Subjects: 
Market stability reserve
cap-and-trade
EU ETS reform
foresight
myopia
marketfailure
JEL: 
D21
D47
Q58
Q54
Document Type: 
Working Paper

Files in This Item:
File
Size
1.18 MB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.