Emissions trading, firm heterogeneity, and intra-industry reallocations in the long run

Yoshifumi Konishi, Nori Tarui

Research output: Contribution to journalArticlepeer-review

24 Citations (Scopus)


Design of environmental regulation has substantial implications for size distribution and mass of firms within and across industries in the long run. In a general equilibrium model that accounts for endogenous entry and exit of heterogeneous firms, the welfare impacts of emissions trading are analytically decomposed into the effects on economy-wide income, mass of firms, firm size distribution, output price markups, and factor prices. Distortionary impacts on size distribution and permit price depend on the conditionality of permit distribution, interactions between changes in entry-exit conditions and in aggregate accounting conditions, the factor intensity of entry, and coverage of non-pollution-intensive sectors in emissions trading.

Original languageEnglish
Pages (from-to)1-42
Number of pages42
JournalJournal of the Association of Environmental and Resource Economists
Issue number1
Publication statusPublished - 2015 Mar 1
Externally publishedYes


  • Conditional allocation rules
  • Emissions trading
  • Endogenous entry/ exit
  • Heterogeneous firms
  • Imperfect competition
  • Melitz model
  • Size distribution of firms

ASJC Scopus subject areas

  • Economics and Econometrics
  • Nature and Landscape Conservation
  • Management, Monitoring, Policy and Law


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