Economic impacts from the introduction of dual system -carbon tax plus emission trading- to the Korean economy were analyzed. For the comprehensive analysis, a Computable General Equilibrium (CGE) model was developed in which dual system can be comprehensively analyzed. When emission trading can not be introduced to all emitters in the economy, dual system with carbon tax for small emitters and emissions trading for large emitters could be the best approach in domestic carbon dioxide abatement strategy. In dual system, monetary interests of the participants in emission trading and carbon tax payer are dependent on their marginal cost to reduce carbon emission. By the introduction of dual system, GDP, private consumption and value-added are evaluated to be decreased while international trade balance is estimated to be improved.
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