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Who gains from market fragmentation?: Evidence from the early stages of the EU carbon market

Research output: Working paper

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Who gains from market fragmentation? Evidence from the early stages of the EU carbon market. / Slechten, Aurelie; Cantillon, Estelle.
Paris: CEPR Press, 2023.

Research output: Working paper

Harvard

Slechten, A & Cantillon, E 2023 'Who gains from market fragmentation? Evidence from the early stages of the EU carbon market' CEPR Press, Paris. <https://cepr.org/publications/dp18118>

APA

Slechten, A., & Cantillon, E. (2023). Who gains from market fragmentation? Evidence from the early stages of the EU carbon market. CEPR Press. https://cepr.org/publications/dp18118

Vancouver

Slechten A, Cantillon E. Who gains from market fragmentation? Evidence from the early stages of the EU carbon market. Paris: CEPR Press. 2023 Apr 26.

Author

Slechten, Aurelie ; Cantillon, Estelle. / Who gains from market fragmentation? Evidence from the early stages of the EU carbon market. Paris : CEPR Press, 2023.

Bibtex

@techreport{41a07c182bb14f15b2f5173cb0a360e4,
title = "Who gains from market fragmentation?: Evidence from the early stages of the EU carbon market",
abstract = "We document the impact of market fragmentation during the first phase of the EU emissions trading scheme on the terms that traders were able to get. We observe the universe of over-the-counter (OTC) and exchange transactions and the transaction prices associated with four of the 11 exchanges that were active during that period. We define a measure of price advantage based on the difference between the transaction price and the median market-wide price that day. We decompose price advantage into its exchange, counterparty and trader drivers and show that where traders traded and how connected they and their counterparties were with the rest of the market covary with the terms they were able to obtain. Such features are expected to characterize OTC transactions but not, typically, anonymous exchange transactions. The high level of market fragmentation during the first phase, which was a policy choice, hampered information aggregation about the overall balance between supply and demand in the market, and put small and non-energy compliance traders at a large disadvantage.",
author = "Aurelie Slechten and Estelle Cantillon",
year = "2023",
month = apr,
day = "26",
language = "English",
publisher = "CEPR Press",
type = "WorkingPaper",
institution = "CEPR Press",

}

RIS

TY - UNPB

T1 - Who gains from market fragmentation?

T2 - Evidence from the early stages of the EU carbon market

AU - Slechten, Aurelie

AU - Cantillon, Estelle

PY - 2023/4/26

Y1 - 2023/4/26

N2 - We document the impact of market fragmentation during the first phase of the EU emissions trading scheme on the terms that traders were able to get. We observe the universe of over-the-counter (OTC) and exchange transactions and the transaction prices associated with four of the 11 exchanges that were active during that period. We define a measure of price advantage based on the difference between the transaction price and the median market-wide price that day. We decompose price advantage into its exchange, counterparty and trader drivers and show that where traders traded and how connected they and their counterparties were with the rest of the market covary with the terms they were able to obtain. Such features are expected to characterize OTC transactions but not, typically, anonymous exchange transactions. The high level of market fragmentation during the first phase, which was a policy choice, hampered information aggregation about the overall balance between supply and demand in the market, and put small and non-energy compliance traders at a large disadvantage.

AB - We document the impact of market fragmentation during the first phase of the EU emissions trading scheme on the terms that traders were able to get. We observe the universe of over-the-counter (OTC) and exchange transactions and the transaction prices associated with four of the 11 exchanges that were active during that period. We define a measure of price advantage based on the difference between the transaction price and the median market-wide price that day. We decompose price advantage into its exchange, counterparty and trader drivers and show that where traders traded and how connected they and their counterparties were with the rest of the market covary with the terms they were able to obtain. Such features are expected to characterize OTC transactions but not, typically, anonymous exchange transactions. The high level of market fragmentation during the first phase, which was a policy choice, hampered information aggregation about the overall balance between supply and demand in the market, and put small and non-energy compliance traders at a large disadvantage.

M3 - Working paper

BT - Who gains from market fragmentation?

PB - CEPR Press

CY - Paris

ER -