A Preliminary Investigation of the Optimal Percentage Requirement in an Electricity Market with Tradable Green Certificates


Around the world, energy markets are being liberalized with the goal of achieving fully competitive markets while at-taining environmental policy objectives. This paper considers a system of Tradable Green Certificates (TGCs)—a mar-ket based regulatory instrument designed to promote electricity generation from renewable energy sources. In a TGC program, the principal policy instrument is the “percentage requirement” which stipulates the percentage of total elec-tricity generation that must be obtained from renewable sources. This paper provides a preliminary investigation of the socially optimal choice of the percentage requirement in a Cournot duopoly setting. The paper discusses the problem geometrically and considers some of the practical difficulties associated with the determination of the optimal percent-age requirement. Several important avenues for generalization of the results are also discussed.

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K. Currier and S. Rassouli-Currier, "A Preliminary Investigation of the Optimal Percentage Requirement in an Electricity Market with Tradable Green Certificates," Theoretical Economics Letters, Vol. 2 No. 2, 2012, pp. 216-220. doi: 10.4236/tel.2012.22039.

Conflicts of Interest

The authors declare no conflicts of interest.


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