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Sustainability 2016, 8(6), 583; doi:10.3390/su8060583

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

Korea Energy Economics Institute, Jongga-ro 405-11, Jung-gu, Ulsan 44543, Korea
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Academic Editor: Giuseppe Ioppolo
Received: 30 March 2016 / Revised: 16 June 2016 / Accepted: 17 June 2016 / Published: 21 June 2016
(This article belongs to the Section Economic, Business and Management Aspects of Sustainability)
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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. View Full-Text
Keywords: carbon markets; indirect emissions; market power carbon markets; indirect emissions; market power
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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MDPI and ACS Style

Shim, S.; Lee, J. Covering Indirect Emissions Mitigates Market Power in Carbon Markets: The Case of South Korea. Sustainability 2016, 8, 583.

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