Carbon Allowances and Electricity Prices: a Game-theory Approach
Abstract
We address the problem of electricity producers interacting between an electricity market and an emissions trading scheme with a tax incurring higher costs : one expects emissions to be reduced. We propose to investigate, through a game theoretic approach, the outcomes of such policy instruments when they are applied to electricity systems. For this, we will use a two step game approach, addressing each market, in order to assess the electricity price and the carbon allowances.