A Network-Based Analysis of the European Emission Market
This paper analyses the European Emission Trading System (ETS) from a network perspective. It is shown that the network exhibits a strong core-periphery structure also reflected in the network formation process. Due to a lack of centralized market places, operators of installations which fall under the EU ETS regulations have to resort to local networks or financial intermediaries if they want to participate in the market. This undermines the central idea of the ETS to exploit marginal abatement costs.
KeywordsClean Development Mechanism Emission Trading Emission Trading Scheme Marginal Abatement Cost Joint Implementation
The authors acknowledge the support of the EU FP7 FET project SIMPOL.
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