The evolutionary game analysis and simulation with system dynamics of manufacturer's emissions abatement behavior under cap-and-trade regulation

Suyong Zhang, Chuanxu Wang and Chao Yu

Applied Mathematics and Computation, 2019, vol. 355, issue C, 343-355

Abstract: In the context of cap-and-trade regulation, this paper develops the models of evolutionary game between governments and manufacturers, and analyzes the impacts of government policy on the decisions of manufacturers and the dynamic tendency of cap-and-trade market. It investigates the impacts of government policies on carbon trading market under two scenarios: the static carbon trading price and the dynamic carbon trading price. Under dynamic carbon trading price, the equilibrium strategy of the evolutionary game can be obtained. Then a numerical example is examined with system dynamics simulation. It is shown that, when governments implement the static carbon trading price, the evolutionary game cannot reach the stability. Under the dynamic carbon trading price, the evolutionary game has the evolutionary stable strategy. Dynamic carbon trading pricing policy is effective in accelerating the carbon reduction. Moreover, the probability of manufacturers introducing green technology is negatively correlated with governmental intervention costs and positively correlated with governmental penalty for manufacturers’ speculations.

Keywords: Cap-and-trade; Green technology; Evolutionary game; System dynamics; Carbon trading price (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (20)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:apmaco:v:355:y:2019:i:c:p:343-355

DOI: 10.1016/j.amc.2019.02.080

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