Pollution Under Environmental Regulation Within Multi-Period Auctions: The Case of Electricity Markets

  • Francesco Gullì
Part of the Lecture Notes in Energy book series (LNEN, volume 6)


This chapter aims at exploring how imperfect competition can affect the performance of environmental policy. The focus is on power generation which is a particularly interesting case for three reasons. First it is one of the most important environmentally regulated markets. Second the demand for electricity varies cyclically over time (for example on hourly basis). Third the pricing mechanism is a multi-period and multi-unit first price auction. The main finding of the analysis is that, looking at the entire demand cycle, it is very unlikely that imperfect competition may lessen the performance of environmental policy although, in line with the current literature, the analysis shows that pollution can increase within specific cycle periods, at least in the short-run.


Marginal Cost Environmental Policy Market Power Electricity Market Imperfect Competition 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


  1. Bonacina M, Gullì F (2007) Electricity pricing under “carbon emission trading”: a dominant firm with competitive fringe model. Energy Policy 35:4200–4220CrossRefGoogle Scholar
  2. Borenstein S, Bushnell J, Wolak F (2002) Measuring market inefficiencies in California’s restructured wholesale electricity market. Am Econ Rev 92(5):1376–1405CrossRefGoogle Scholar
  3. Canton J, Saubeyran A, Stahn H (2008) Environmental taxation and vertical Cournot oligopolies: how eco-industries matter. Environ Resour Econ 40:369–382CrossRefGoogle Scholar
  4. Chernyavs’ka L, Gullì F (2008) Marginal CO2 cost pass-through under imperfect competition. Ecol Econ 68:408–421CrossRefGoogle Scholar
  5. Conrad K, Wang J (1993) The effect of emission taxes and abatement subsides on market structure. Int J Ind Organ 11:499–518CrossRefGoogle Scholar
  6. Denny E, O’Malley M (2009) The impact of carbon prices on generation-cycling costs. Energy Policy 37:1204–1212CrossRefGoogle Scholar
  7. Gullì F (2008) Modeling the short-run impact of carbon emissions trading on the electricity sector. In: Gullì F (ed) Markets for carbon and power pricing in Europe: theoretical issues and empirical analyses. Edward Elgar, Aldershot, UK and Brookfield, WIGoogle Scholar
  8. Levin D (1985) Taxation within Cournot oligopoly. J Public Econ 27:281–290CrossRefGoogle Scholar
  9. Requate T (2005) Environmental policy under imperfect competition – a survey. CAU, Economics Working Papers, no 2005–12Google Scholar
  10. Sugeta H, Matsumoto S (2007) Upstream and downstream pollution taxations in vertically related markets with imperfect competition. Environ Resour Econ 38:407–432CrossRefGoogle Scholar
  11. von der Fehr N, Harbord D (1993) Spot market competition in the UK electricity industry. Econ J 103(418):531–546CrossRefGoogle Scholar
  12. von der Fehr N, Harbord D (1998) Competition in electricity spot markets – economic theory and international experience, Memorandum, n. 5, Department of Economics, University of OsloGoogle Scholar
  13. Wolfram CD (1998) Strategic bidding in a multiunit auction: an empirical analysis of bids to supply electricity in England and Wales. RAND J Econ 29(4):703–725CrossRefGoogle Scholar

Copyright information

© Springer-Verlag London 2013

Authors and Affiliations

  1. 1.MilanItaly

Personalised recommendations