CERE Working Papers, CERE - the Center for Environmental and Resource Economics
Firm Trading Behaviour and Transaction Costs in the European Union’s Emission Trading System: An Empirical Assessment
() and Andrius Kažukauskas
Abstract: To the best of our knowledge, this study is one of the
first to empirically analyse the trading behaviour of all ETS firms during
the first phase of the EU’s Emissions Trading System. We use a unique
dataset which allows investigating the importance of permit trading
transaction costs, such as information costs and search costs. This paper
shows that transaction costs can play an important role in the initial
years of the programme. These costs are significant in explaining why a
number of ETS firms did not sell their unused allowances on the market.
This study also supports the concerns that transaction costs might be
excessive for smaller participants.
Keywords: emission trading; Europe; firm level data; transaction costs; (follow links to similar papers)
JEL-Codes: Q52; (follow links to similar papers)
16 pages, March 1, 2012
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