 Impacts of ETS allocation rules on abatement investment and market structureKyoung-Soo Yoon and Hyungna Oh Energy Economics, 2021, vol. 101, issue C Abstract: We examine the influence of carbon permit allocation rules on market structure in a Cournot duopoly market. This study demonstrates that the benchmark allocation rule is more efficient than grandparenting in terms of abatement investment and market output. Introduction of the emission trading scheme affects market structure towards higher market concentration, regardless of the allocation rule, and benchmarking tends to make the market more concentrated, as larger firms have more efficient abatement technology. Our analytical findings support the point that the benchmark allocation rule should be widely adopted from the perspective of improving the efficiency of greenhouse gas reduction. At the same time, we have also raised a concern that the market structure will move in an unfavorable direction towards to smaller firms. Keywords: Allocation rules; Grandparenting; Benchmarking; Abatement investment; Market structure (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:101:y:2021:i:c:s0140988321003005 DOI: 10.1016/j.eneco.2021.105402 Access Statistics for this article Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant More articles in Energy Economics from Elsevier |
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