Game analysis and strategy choices of north-south carbom emission quota policies
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    Abstract:

    By reviewing the evolution of carbon emission abatement policies,this paper presents a two-stage game for the interaction between government carbon emission permits policies and firms’abatement level and obtains the equilibrium solution,which is based on the assumptions among double variables( trade comparative advantage and environment comparative advantage) ,carbon emission quota policies and imperfectly competitive conditions. Using the way of backward induction,we first obtain the equilibrium solution and then get the optimal general steady equilibrium solution considering both the incentive compatibility constraint and the individual rationality constraint. This paper analyses,compares and derives the conditions of policy choices,from the angles of welfare effect,trade effect and environment effect,among the three different permits policies of North-South country ( named non-tradable carbon permits policy,tradable carbon permits policy,and cooperative and tradable carbon permits policy respectively) . The results show that: From the view of welfare improvement,the permits market would promote effective allocation of resources and leads to a Pareto improvement.In terms of environment improvement,environment effect weights most with cooperative and tradable carbon permits policy,least with non-tradable carbon permits policy. When considering trade improvement,the three policies are equally prosperous,except that the cooperative and tradable permits policy is more favorable for the north while tradable permits are preferred by the south. All the three policies could not fulfill environment and trade improvement at the same time. Thus,in the short term,the south will give preference to the tradable permits policy. It’s unpractical for developed countries to achieve global environmental cooperation in a short time. Following a more pragmatic principle and taking the active and steady way,realizing cooperation step by step is a better choice for developed country.

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  • Online: April 22,2018
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