Emissions trading systems have come to the fore as the most economically efficient mechanisms that can be employed to bring about an optimal greenhouse gas reduction goal. Even though much has been written about the advantages and disadvantages of these systems, one element of crucial importance and#8211; emission allowance allocation and#8211; has not been considered in adequate depth until the present study. Such an analysis takes on increased importance as it seems likely that market-based auctioning will become the default allocation method throughout the EU under a proposed amendment...