Economic analysis on carbon market and regulation strategies

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The purpose of this research project is to conduct economic studies on carbon (and related) market formation and the role of governments. The analysis is based on techniques and ideas used in environmental economics and financial economics. The focus is centered around the integration of regulation and competition policies.Main results are the following: First, safety valve mechanism, which is proposed to ease carbon price fluctuations and risks, is analyzed. A rule for trigger price setting is proposed. Second, a general framework for the application of financial engineering techniques to environmental and resource policies is discussed. Finally, concepts regarding technology investment strategy, in particular optimal timing for irreversible decisions are analyzed.