TY - UNPB
T1 - Sellers' hedging incentives at EPA's emission trading auction
AU - Dijkstra, B.R.
AU - Haan, M.
N1 - Relation: http://som.rug.nl/
date_submitted:1999
Rights: Graduate School/Research Institute, Systems, Organisations and Management (SOM)
PY - 1999
Y1 - 1999
N2 - Cason (1993)argued thattheauction theEPAused in order
to start the market for sulfur allowances, is not efficient.
The set-up of the auction gives both buyers and sellers an
incentive to understate their valuation of an allowance.
In this paper, we show that the sellers’ incentives are even
more perverse than Cason suggested. In particular, we show
that sellers have an incentive to set their ask price equal
to zero, while simultaneously hedging their bets by submitting
a positive bid. It is not possible to derive the Nash equilibrium
for this set-up. If such an equilibrium exists, sellers either set
only a positive ask price, or an ask price equal to zero, and a
positive bid as well.
AB - Cason (1993)argued thattheauction theEPAused in order
to start the market for sulfur allowances, is not efficient.
The set-up of the auction gives both buyers and sellers an
incentive to understate their valuation of an allowance.
In this paper, we show that the sellers’ incentives are even
more perverse than Cason suggested. In particular, we show
that sellers have an incentive to set their ask price equal
to zero, while simultaneously hedging their bets by submitting
a positive bid. It is not possible to derive the Nash equilibrium
for this set-up. If such an equilibrium exists, sellers either set
only a positive ask price, or an ask price equal to zero, and a
positive bid as well.
KW - Verhandelbare $emissierechten
KW - EPA (Environmental Protection Agency)
KW - Economische modellen
KW - Milieueconomie
KW - 83.63;
M3 - Working paper
BT - Sellers' hedging incentives at EPA's emission trading auction
PB - s.n.
ER -