Strategic Interaction Among Firms in Output and Emission Markets: A Unified Framework

  • Francisco J. AndréEmail author
  • Luis M. de Castro
Part of the International Series in Operations Research & Management Science book series (ISOR, volume 280)


Cap-and-trade (CAT) programs are nowadays a common tool used by authorities to regulate polluting emissions and tackle environmental problems such as Climate Change. In this chapter, we analyze the implications of firm’s strategic behavior in product and emission permit markets for the success of these policies. We survey the related literature focusing on the relevance of market structure and firms’ competition. We develop a simple but unifying setting to revisit some of the main academic results on the subject.


Emissions trading Oligopoly Market interaction Cournot model Stackelberg model 



Francisco J. André and Luis M. de Castro acknowledge support from the Spanish Ministry of Economy, Industry and Competitiveness and Development Fund, ERDF (grant ECO2015-70349-P). F.J. André also thanks Universidad Complutense de Madrid and Banco Santander (grant PR26/16-15B-4) and the European Commission (project INNOVEC’EAU, SOE1/P1/F0173).


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© Springer Nature Switzerland AG 2020

Authors and Affiliations

  1. 1.Department of Economic AnalysisICEI, Universidad Complutense de MadridMadridSpain
  2. 2.ICEI, Universidad Complutense de MadridMadridSpain

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