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Emission Market Design Based on Supply Function Equilibrium Model
International Journal of Economy, Energy and Environment
Volume 1, Issue 1, August 2016, Pages: 1-7
Received: Sep. 25, 2015; Accepted: Oct. 20, 2015; Published: Aug. 28, 2016
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Shijun Fu, Department of Logistic Engineering, Chongqing University of Arts and Sciences, Chongqing, China
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This paper designs an emission market for electricity industry based on supply function equilibrium model. It refers to major features of the existing emission market. And it is improved in (i) electricity-environment coordinated regulation, (ii) adopting the first price-quantity sealed auction for allowances allocation, (iii) penalty covering generator’s all emissions, and (iv) pricing allowances through both market bidding process and regulatory process coordinately. We depict generator’s decision as a stochastic parameter linear programming model, which provides us its bidding curve. According to market equilibrium, each generator gets its allowances at a market clearing price. We find that, (i) the new market can not only effectively motivate generator to mitigate emission individually, but also can save allowances through market process; (ii) it can be an effective instrument to pricing emission. Finally, we present a numerical simulation for its validity, and results are well fitted to the theoretical conclusions.
Electricity Industry, Emission Market Design, Supply Function Equilibrium, Complexity System Modeling
To cite this article
Shijun Fu, Emission Market Design Based on Supply Function Equilibrium Model, International Journal of Economy, Energy and Environment. Vol. 1, No. 1, 2016, pp. 1-7. doi: 10.11648/j.ijeee.20160101.11
Copyright © 2016 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License ( which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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