Examining the linkage between economic policy uncertainty, coal price, and carbon pricing in China: Evidence from pilot carbon markets.

Economic policies affect companies' production decisions. And the energy consumption volume is an intuitive reflection of the enterprise's production decisions. In China, coal is the main source of carbon emissions and the most important energy source. Therefore, the coal market and the uncertainty of economic policies are both directly tied to the carbon market. This study explores both the direct impact of economic policy uncertainty and coal price on carbon prices as well as the indirect impact of economic policy uncertainty on carbon prices through coal prices by utilizing the DCC-GARCH model and the NARDL model. The findings indicate that the dynamic correlations between coal prices and the CEPU are always negative and that those between the price of carbon and the CEPU vary by area. Meanwhile, the dynamic correlations between coal and carbon prices are only positive in Shenzhen and Beijing. Both coal prices and economic policy uncertainty produce asymmetrical impacts on carbon prices. Some policy implications are provided for developing the carbon markets in light of the results drawn from the study.

An Endowment Effect Study in the European Union Emission Trading Market based on Trading Price and Price Fluctuation.

This paper pioneers to investigate the endowment effect in the European Union mission Trading Scheme (EU ETS) as well as the impacts of trading experience and compliance pressure on the endowment effect. This study is based on the complete transaction records of the market. In the data set, the records of two consecutive reverse transactions from a same emitting company are selected. The lowest price that the buyer is willing to pay (WTP) and the maximum price the seller is willing to accept (WTA) are evaluated by excluding their risk cost that is used to avoid short-term fluctuations in the price. By distinguishing the difference between WTA and WTP, and long-term fluctuations in the prices during the two transactions, the trader's endowment effect can be quantitively assessed. The results show that the degree of endowment effect of traders follows the trading experience. In addition, since the EU ETS is a cap-and-trade market, the traders face different levels of compliance pressure; when the pressure of the emission companies increases, the degree of endowment effect will also decrease.