Economics, Econometrics and Finance
8 years ago

Emission rights trading shifts market share towards cleaner firms, raising prices.

Industrial Engineering and Management
A Model of Firm's Initiate Allocation of Emission Right under Conditions of Duopoly
Chen De-hu

Paper Summary

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The trading of emission rights between companies in a duopoly can change their market shares, decrease total permits, and raise prices. If both companies have the same clean output, their production decreases equally. But if one company is cleaner than the other, the market share shifts from the polluting company to the cleaner one.