2002 World Congress of Environmental and Resource Economists

Implementation of the Kyoto Protocol is likely to leave Russia with market power in the market for emission permits. Ceteris paribus, this will increase the permit price relative to the competitive outcome. However, Russia is also a large exporter of gas in the European gas market and the higher the permit price the lower is the producer price of gas. Thus, if Russia coordinates its permit market and gas market policies, market power will not necessarily lead to a higher permit price. Gas sellers may also exert market power in the permit market provided that they conceive the permit price to be influenced by the gas volumes. If higher gas volumes drive up the permit price and Russian gas sellers coordinate with Russian permit sellers then Russia will become more aggressive in the gas market relative to its competitors. The result is reversed if high gas volumes drive the permit price down.



	Paper Title:	Market Power In The Market For Greenhouse Gas Emission Permits: Impacts On The European Gas Market
	Presenting Author:	Cathrine Hagem (University of Oslo, Department of Economics .)
	Coauthor 1:	Ottar Mæstad
	Coauthor 2:
	Coauthor 3:
	Abstract:	Implementation of the Kyoto Protocol is likely to leave Russia with market power in the market for emission permits. Ceteris paribus, this will increase the permit price relative to the competitive outcome. However, Russia is also a large exporter of gas in the European gas market and the higher the permit price the lower is the producer price of gas. Thus, if Russia coordinates its permit market and gas market policies, market power will not necessarily lead to a higher permit price. Gas sellers may also exert market power in the permit market provided that they conceive the permit price to be influenced by the gas volumes. If higher gas volumes drive up the permit price and Russian gas sellers coordinate with Russian permit sellers then Russia will become more aggressive in the gas market relative to its competitors. The result is reversed if high gas volumes drive the permit price down.
	Link to paper:	http://weber.ucsd.edu/~carsonvs/papers/635.pdf

	Session / Day / Time	1F / Monday / 8:00 - 10:00 am

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