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http://dx.doi.org/10.15266/KEREA.2015.24.3.489

The Effects of the Allocation and Accounting Methods of GHG Allowances on Firms' Financial Positions  

Oh, Hyungna (College of International Studies, Kyung Hee University)
Hong, Inkee (Economics Dept., Daegu University)
Publication Information
Environmental and Resource Economics Review / v.24, no.3, 2015 , pp. 489-522 More about this Journal
Abstract
According to Law on Allocation and Trading of GHG Allowances of 2013 in Korea as well as the 2014 National Master Plan for Korean Emissions Trading System, the System should be designed to minimize the change in the market positions of the affected firms. In this paper, we investigate how that principle might become ineffective by the ways of distributing allowances and applying different accounting methods using a Cournot duopoly model. Although the way of allocating allowances freely to firms combined with accounting them for having no values would minimize their market positions, it would not the most cost-effective way of GHG reduction since it does not provide financial market with accurate informations.
Keywords
Korean Emissions Trading System; Accounting Methods; Market Competitiveness;
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