Research of externality of electricity generation in electricity market

As we all know, "sustainable development" idea is spread all over the world. Pollutant control regulations is not only related with the optimization of power resources and environment protection, but also related with the development of electricity market and power structure in the future. How to resolve externality of electricity market is becoming the focus world widely. This article analyzes two key questions of emission trading including allocation and pricing of emission permits. This article also makes economic analysis of pricing of emission trading and set up pricing model for emission permits based on shadow price theory. With these researches, the article verifies that shadow price can be used to reveal the intrinsic value of emission permits resource and realize the optimization allocation and utilization of emission permits among all the electricity generation enterprises. The article also verifies that shadow pricing model could promote total amount control of environment pollution.