Ownership Structure and Prices a Case Study of the Swedish Tradable Green Certificate Market

Abstract

This paper investigates the ownership structure among participants in the Swedish tradable green certificate (TGC) system and its implications for TGC prices. We find considerable cross-ownership – a situation when a firm is active on both the demand and supply sides of the TGC market. However, even after accounting for cross-ownership, the market concentration of the entire TGC market is low and has decreased over time. Despite the absence of market concentration, our analysis of TGC prices indicates that cross-ownership firms have the ability to differentiate TGC prices from non-crossownership firms. Such behavior is consistent with the behavioral assumption that the ultimate owner’s objective is to maximize the total profit of the portfolio of shares, and that, therefore, the pricing behavior would differ from that of a perfectly competitive firm without ownership links to other firms in the industry.

Keywords: microdata, ownership structure, prices, Renewable energy policy, Sweden, tradable green certificates