This study aims to evaluate the environmental and economic effects of emission reduction policies in the context of the assumption that the policy may results vary depending on the size of firms. Recursive Computable General Equilibrium(CGE) model is used and the Korean input-output tables divided by the size of firms were entered as input data. In the third year of the three-year research, this study focuses on establishing scenarios based on foreign policy changes.
Three main scenarios are established as follow. 1) Korea adopts a carbon tax, 2) Korea, EU, and Japan adopt a carbon tax, 3) Korea, EU, Japan, U.S., and China adopt a carbon tax. Additionally, each main scenario has three sub-scenarios based on its imposing and recycling methods. a) lump-sum transfer to households, b) reduce labor tax of all employees, c) reduce labor tax of employees working for SMEs.
The result indicates that total output of Korea increases as the number of countries adopting carbon tax increases. Output of export-oriented industries increase more to varying degrees based on type of industries or size of firms. However, SMEs of vehicle, construction, and transportation industries are expected to be negatively effected. Labor demand generally decreases, while there exist differences between size of firms.
As a result of comparing scenarios which imposing carbon tax differently between large firms and SMEs, it indicates that some industries that the amount of carbon emission is relatively small h