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Simulation of an uncertain emission market for greenhouse gases using agent-based methods

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  • Zbigniew Nahorski
  • Jarosław Stańczak
  • Piotr Pałka

Abstract

The paper presents the problem of a simulation of the greenhouse gases emission permits market where only low accuracy emission amounts are known. An organization of the market with uncertain emissions is proposed and trading rules for individual market participants are discussed. Simulation of the market is based on a multi-agent system. Negotiation of purchase/sale prices between the parties are introduced, where the trading parties adopt one of two options: (i) bilateral negotiations, and (ii) sealed bid reverse auctions. Results of simulation runs show trajectories of transaction prices, as well as probability distributions of learning agents’ bidding prices. Copyright The Author(s) 2014

Suggested Citation

  • Zbigniew Nahorski & Jarosław Stańczak & Piotr Pałka, 2014. "Simulation of an uncertain emission market for greenhouse gases using agent-based methods," Climatic Change, Springer, vol. 124(3), pages 647-662, June.
    • Handle: RePEc:spr:climat:v:124:y:2014:i:3:p:647-662
    DOI: 10.1007/s10584-013-1039-2
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    References listed on IDEAS

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    1. Ermoliev, Yuri & Klaassen, Ger & Nentjes, Andries, 1996. "Adaptive Cost-Effective Ambient Charges under Incomplete Information," Journal of Environmental Economics and Management, Elsevier, vol. 31(1), pages 37-48, July.
    2. Grimm, Volker & Berger, Uta & DeAngelis, Donald L. & Polhill, J. Gary & Giske, Jarl & Railsback, Steven F., 2010. "The ODD protocol: A review and first update," Ecological Modelling, Elsevier, vol. 221(23), pages 2760-2768.
    3. T. Ermolieva & Y. Ermoliev & G. Fischer & M. Jonas & M. Makowski, 2010. "Cost Effective and Environmentally Safe Emission Trading Under Uncertainty," Lecture Notes in Economics and Mathematical Systems, in: Kurt Marti & Yuri Ermoliev & Marek Makowski (ed.), Coping with Uncertainty, chapter 0, pages 79-99, Springer.
    4. Y. Ermoliev & M. Michalevich & A. Nentjes, 2000. "Markets for Tradeable Emission and Ambient Permits: A Dynamic Approach," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 15(1), pages 39-56, January.
    5. Brenner, Thomas, 2006. "Agent Learning Representation: Advice on Modelling Economic Learning," Handbook of Computational Economics, in: Leigh Tesfatsion & Kenneth L. Judd (ed.), Handbook of Computational Economics, edition 1, volume 2, chapter 18, pages 895-947, Elsevier.
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    Cited by:

    1. Xiangyang Xu & Joanna Horabik & Zbigniew Nahorski, 2014. "Pricing of uncertain certified emission reductions in a Chinese coal mine methane project with an extended Rubinstein-Ståhl model," Climatic Change, Springer, vol. 124(3), pages 617-632, June.

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