We have the pleasure to announce Sebastian Schwenen (TU Munich) as the next speaker in our CERNA Research Seminar series. The seminar will take place on Wednesday 23/3/2022 at 16:00 in Salle Chevalier. The log-in information for the live stream on Zoom will also be provided in due course.

Sebastian will talk about:

Strategic Ability and Corporate Carbon Emissions

We measure the ability of  firms to play oligopoly games, and the consequences for market efficiency and carbon emissions if  firms lack strategic ability and deviate from Nash-equilibrium outcomes. Making use of rich micro-level data from the Spanish electricity market, we show that large incumbent firms approximately offer optimal output and charge optimal prices. Smaller firms lack strategic ability and tend to "price their production out of the market". We show that this heterogeneity in strategic ability deteriorates the efficiency of carbon pricing, because the allocation of carbon abatement across  firms is not optimal. We  find that large and strategically able firms with high shares of low-carbon generation are pivotal for efficient abatement and for decreasing the sector's carbon intensity. We compute counterfactual merger cases that allow for higher carbon prices and decrease the sector's carbon intensity, at no costs for consumers.

Contact : Sven Heim