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Mandatory emission trading schemes are being established around the world. Participants of such market schemes are always exposed to risks. This leads to the creation of an accompanying market for emi...
Risk-Neutral Pricing of Financial Instruments in Emission Markets
Risk-Neutral Pricing Financial Instruments Emission Markets
2010/12/13
We present a novel approach to the pricing of financial instruments in emission markets, for example, the EU ETS. The proposed hybrid model is positioned between existing complex full equilibrium mode...