Impacts of tradable emission permits on oligopoly electricity market production under complete and incomplete information

A method is developed to explore the potential links between an oligopolistic electricity market and a competitive emission permit market in which permits allocated to those highly efficient generation companies (units) with lower emissions could be traded to other companies with higher emissions. The well-developed Cournot non-cooperative game model is employed to describe the behavior of power producers, and to determine the market equilibriums of generation outputs under complete and incomplete information. A numerical example with six power producers is employed to demonstrate the features of the developed model as well as to analyze the impacts of emission permit trading on the oligopoly electric market equilibriums.