The emissions trading paradox

摘要: Abstract This article considers the price history of CO2 allowances in EU Emission Trading Scheme. Since European Emissions started 2005, prices have varied between less than one and thirty Euro per ton CO2. previously unpredicted volatility and, more notably, a significant crash May 2005 led to hypothesis that electricity producers might use their market power influence allowances. Besides power, combination information asymmetry interdependencies (between primary goods – especially allowances) plays an important role explaining emissions trading paradox. The model presented will show banking can lead such if participators act rationally. Furthermore, scenario be profitable for sellers at cost buyers.