What Role Should Government Play in the Personal Carbon Trading Market: Motivator or Punisher?

Daoyan Guo, Hong Chen and Ruyin Long
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Daoyan Guo: School of Management, China University of Mining and Technology, Xuzhou 221116, China
Hong Chen: School of Management, China University of Mining and Technology, Xuzhou 221116, China
Ruyin Long: School of Management, China University of Mining and Technology, Xuzhou 221116, China

IJERPH, 2019, vol. 16, issue 11, 1-16

Abstract: With increasing downstream carbon emissions, the implementation of a personal carbon trading scheme is urgently required. In order to facilitate the progress, government departments are supposed to adopt a motivating or punitive policy to make guidance for downstream carbon emissions reduction. This study determined and verified the evolutionarily stable strategies (ESSs) of government departments and individuals whose carbon emissions exceeded the initial carbon allowance (CEEICA individuals) by using the evolutionary game and numerical simulation methods, respectively. The findings show that the ESS of government departments is always a punitive policy during the variation of strategies of CEEICA individuals. The ESS of CEEICA individuals is an active plan when the added cost (the difference between emissions reduction cost and trading earning) is less than the carbon tax; otherwise, it is a passive plan. Furthermore, the rate of convergence can be significantly influenced by the probabilistic distances between initial strategies and the ESSs. On the basis of these findings, this study suggested implementing a “punishment first, motivation-supplemented” policy, and developing a stable operational mechanism for a personal carbon trading market.

Keywords: personal carbon trading; downstream carbon emissions; government policy; evolutionary game; numerical simulation (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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