Browsing by Author "Kiviranta, Juuso"

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The magnitude of carbon leakage and addressing it in the EU ETS
(2019) Kiviranta, Juuso
School of Business | Bachelor's thesis
This literary review discusses the phenomenon of carbon leakage in the European Union emissions trading system (EU ETS). I present the main principles of emissions trading applied in the EU ETS and how the current ETS policy is build. These lay the groundwork for assessing the magnitude of carbon leakage in the EU ETS and how it should be tackled. Assessing the magnitude of carbon leakage and ways to tackle it are the two key questions of this paper. As presented in this paper, carbon leakage might not be that big of a problem for the ETS as the European policy could insist. This suggests that the policy is partly created on political basis ignoring the environmental and economic principles beneath it. I also present two solutions to carbon leakage presented in the literature. Out of the two alternatives, the use of border adjustment is supported by the economic literature. The downside of this environmentally and economically effective solution is its legal restrictions that lower its effectiveness. Despite these restrictions the proposed solution and the other alternative, output-based allocation, deliver better results than the current European policy to fight carbon leakage.
Population uncertainty in first-price auctions
(2022) Kiviranta, Juuso
School of Business | Master's thesis
The modern communication devices enable conducting auctions where all the participants aren’t present at the physical auction house. Furthermore, the rising popularity of online auctions has naturally this feature. These formats give rise to a new type of uncertainty regarding the auction, namely population uncertainty or uncertainty about the number of bidders. In this thesis, I will evaluate the implications of this added uncertainty in the context of first-price auctions, which are auctions where the bidder with the highest bid wins and pays a price equal to their bid. I consider two types of first-price auctions, first, with affiliated private values, and second, with affiliated common values. The former stands for a setting where the value of the object sold is private for every bidder such that the valuations of other bidders do not affect it, but instead, the valuations are affiliated or strongly positively correlated. This is a natural setting in many instances. The latter auction setting on the other hand represents a case where the value of the object sold is common for all the bidders, but the bidders are uncertain of this common value at the time of bidding, and the estimates on the value are again affiliated. This is the case, for instance, in natural resource auctions, when the true value is unknown, but the bidders have independent and identical estimates for the value conditional on the true value. The combination of population uncertainty and first-price auctions with affiliated values can lead to the nonexistence of strictly increasing equilibria, or even to the nonexistence of any equilibria in the common-value case when the expected number of bidders is large enough. The thesis sheds light on this phenomenon by contrasting the models to the literature without population uncertainty. As a main contribution to the affiliated private values literature, I will construct a tractable example of an auction where no strictly increasing equilibrium exists because of the combination of affiliation and population uncertainty. For the common-value literature, my main contribution will be reflecting the model to the affiliated private values case and building an example where the strictly increasing equilibrium fails to exist, but there is an equilibrium where bidders with low estimates on the value of the object pool on a single bid.