caa a22 4500 445854669 CHVBK 20190328074408.0 cr unu---uuuuu 170323e20110701xx s 000 0 eng 10.1007/s10640-010-9435-9 doi (NATIONALLICENCE)springer-10.1007/s10640-010-9435-9 Hintermann Beat Faculty of Business and Economics, University of Basel, Peter Merian-Weg 6, 4002, Basel, Switzerland aut Market Power, Permit Allocation and Efficiency in Emission Permit Markets [Elektronische Daten] [Beat Hintermann] Market power in permit markets has been examined in some detail following the seminal work of Hahn (Q J Econ 99(4):753-765, 1984), but the effect of free allocation on price manipulation with market power in both product and permit market has not been fully addressed. I show that in this case, the threshold of free allocation above which a dominant firm will set the permit price above its marginal abatement costs is below its optimal emissions in a competitive market, and that overall efficiency cannot be achieved by means of permit allocation alone. In addition to being of general economic interest, this issue is relevant in the context of the EU ETS. I find that the largest German, UK and Nordpool power generators received free allowances in excess of the derived threshold. Conditional on having price-setting power in both the electricity and permit markets, these firms would have found it profitable to manipulate the permit price upwards despite being net permit buyers. Springer Science+Business Media B.V., 2010 CO2 nationallicence Cost pass-through nationallicence Emission permit markets nationallicence EU ETS nationallicence Market power nationallicence Permit allocation nationallicence Environmental and Resource Economics Springer Netherlands 49/3(2011-07-01), 327-349 0924-6460 49:3<327 2011 49 10640 https://doi.org/10.1007/s10640-010-9435-9 text/html Onlinezugriff via DOI 1 research-article jats NATIONALLICENCE 856 40 https://doi.org/10.1007/s10640-010-9435-9 text/html Onlinezugriff via DOI NATIONALLICENCE 100 1- Hintermann Beat Faculty of Business and Economics, University of Basel, Peter Merian-Weg 6, 4002, Basel, Switzerland aut NATIONALLICENCE 773 0- Environmental and Resource Economics Springer Netherlands 49/3(2011-07-01), 327-349 0924-6460 49:3<327 2011 49 10640 Metadata rights reserved Springer special CC-BY-NC licence nationallicence BK010053 XK010053 XK010000 NATIONALLICENCE NATIONALLICENCE NL-springer