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Comparative Analysis of Emerging Green Certificate Markets from a Computable General Equilibrium Perspective

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Author(s): Cristina GALALAE | Alexandru VOICU

Journal: Economia : Seria Management
ISSN 1454-0320

Volume: 14;
Issue: 2;
Start page: 392;
Date: 2011;
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Keywords: computational economics | general equilibrium | globalisation | multi-period model | optimising behaviour

ABSTRACT
Whether using market mechanisms to allocate green certificates in various countries is an optimal solution for stimulating green electricity production represents a question proposed by numerous recent comparative analyses, with opinions being split. Our paper proposes a differing perspective, employing modern computational economics techniques in order to study if general equilibrium is achievable, nationally and internationally, and how it compares with the non-market steady state. We analyse the field, determining exogenous and endogenous factors of influence that we cast into functional relationships via econometric estimation. Subsequently, we study four multi-period general equilibrium models, recursive and non-recursive, solving the latter ones via a Johansen/Euler method for simultaneous all-year computation. General equilibrium is shown to be achievable but dependent on country specific conditions, with optimality being relative in a globalised context. In closing, we present a case study focused on providing useful guidelines for future international marketing efforts in this domain.
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