Covering Indirect Emissions Mitigates Market Power in Carbon Markets: The Case of South Korea

Sunghee Shim and Jiwoong Lee
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Sunghee Shim: Korea Energy Economics Institute, Jongga-ro 405-11, Jung-gu, Ulsan 44543, Korea
Jiwoong Lee: Korea Energy Economics Institute, Jongga-ro 405-11, Jung-gu, Ulsan 44543, Korea

Sustainability, 2016, vol. 8, issue 6, 1-11

Abstract: One of the main concerns of policymakers regarding emissions trading markets is that some firms may well enjoy market power owing to their share of the emissions. This study shows that including indirect emissions within the coverage of an emissions trading scheme can help to reduce market power and thereby enhance social efficiency. In this study, the market concentration measured by the Herfindahl-Hirschman Index significantly drops after including indirect emissions in the South Korean emissions trading market. In addition, other market concentration measures are also considered to verify that the conclusion does not depend on the choice of concentration measures.

Keywords: carbon markets; indirect emissions; market power (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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