In this paper we address the problem of policy coordination in the electricity sector when the supply side is subject to a carbon constraint. We specifically evaluate the link between retail electricity pricing and GHG emissions reduction. Moreover, we incorporate in the analysis both the...

Upon discussion of price setting on electricity wholesale markets, many refer to the so-called merit order model. Conventional wisdom holds that during most hours of the year, coal- or natural gas-fired power plants set the price on European markets. In this context, this paper analyses price...