Study on Cleaner Production Subsidies, Income Distribution Imbalance and Carbon Emissions Permit Reallocation Mechanism

Fan Qingquan (), Liu Jingran () and Wang Jingda ()
Additional contact information
Fan Qingquan: The School of Finance and Taxation, Capital University of Economics and Business. Beijing, China
Liu Jingran: The School of Finance and Taxation, Capital University of Economics and Business. Beijing, China
Wang Jingda: The School of Finance and Taxation, Capital University of Economics and Business. Beijing, China

China Finance and Economic Review, 2022, vol. 11, issue 4, 66-88

Abstract: The allocation mechanism for carbon emissions permit(CEP) is an institutional guarantee for advancing the development of China’s unified carbon trading market. The initial allocation of carbon quotas fails to solve new inequalities stemming from subsidizing cleaner production. This paper constructs a theoretical framework that describes China’s progressive decline in carbon intensity, calculates the equilibrium solution on the neoclassical saddle point path using the shooting method, and studies the income distribution imbalance caused by cleaner production subsidies and the reallocation mechanism of carbon emissions permit The main conclusion is that the incremental cleaner production subsidy policy meets the goal of maximizing welfare on the saddle point path, but it may lead to over-investment in the clean sector, thus causing the income distribution imbalance among entities. Further research suggests that the amount of carbon emissions permit acquired by the clean sector should be higher than the actual emissions in the trading market and that, as the cleaner support increases, the share of carbon emissions permit acquired by the sector should be constantly increased through reallocation mechanism. This helps achieve the Pareto improvement in all parties’ economic benefits.

Keywords: carbon emissions permit; carbon trading market; cleaner production subsidies; reallocation mechanism (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1515/cfer-2022-0023 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:cferev:v:11:y:2022:i:4:p:66-88:n:4

DOI: 10.1515/cfer-2022-0023

Access Statistics for this article

China Finance and Economic Review is currently edited by He Dexu

More articles in China Finance and Economic Review from De Gruyter
Bibliographic data for series maintained by Peter Golla ().