Effects of herding behavior of tradable green certificate market players on market efficiency: Insights from heterogeneous agent model

Yi ZUO, Xingang ZHAO

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Front. Energy ›› 2023, Vol. 17 ›› Issue (2) : 266-285. DOI: 10.1007/s11708-021-0752-1
RESEARCH ARTICLE

Effects of herding behavior of tradable green certificate market players on market efficiency: Insights from heterogeneous agent model

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Abstract

Tradable green certificate (TGC) scheme promotes the development of renewable energy industry which currently has a dual effect on economy and environment. TGC market efficiency is reflected in stimulating renewable energy investment, but may be reduced by the herding behavior of market players. This paper proposes and simulates an artificial TGC market model which contains heterogeneous agents, communication structure, and regulatory rules to explore the characteristics of herding behavior and its effects on market efficiency. The results show that the evolution of herding behavior reduces information asymmetry and improves market efficiency, especially when the borrowing is allowed. In addition, the fundamental strategy is diffused by herding evolution, but TGC market efficiency may be remarkably reduced by herding with borrowing mechanism. Moreover, the herding behavior may evolve to an equilibrium where the revenue of market players is comparable, thus the fairness in TGC market is improved.

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Keywords

tradable green certificate / herding behavior / evolution / heterogeneous agent model / complex network

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Yi ZUO, Xingang ZHAO. Effects of herding behavior of tradable green certificate market players on market efficiency: Insights from heterogeneous agent model. Front. Energy, 2023, 17(2): 266‒285 https://doi.org/10.1007/s11708-021-0752-1

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Acknowledgment

This paper was supported by the Beijing Municipal Social Science Foundation (No. 16JDYJB031) and the Fundamental Research Funds for the Central Universities (No. 2020YJ008).

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2021 Higher Education Press
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