The System Dynamics (SD) Analysis of the Government and Power Producers’ Evolutionary Game Strategies Based on Carbon Trading (CT) Mechanism: A Case of China

Xin-gang Zhao and Yu-zhuo Zhang
Additional contact information
Xin-gang Zhao: School of Economics and Management, North China Electric Power University, Beijing 102206, China
Yu-zhuo Zhang: School of Economics and Management, North China Electric Power University, Beijing 102206, China

Sustainability, 2018, vol. 10, issue 4, 1-18

Abstract: Climate warming caused by carbon emissions is one of the most serious problems faced by human beings, and the carbon trading (CT) mechanism is an effective way to promote carbon emission reduction and achieve green and low-carbon development. Scholars have mainly studied the impact of CT on the energy economy system, and few scholars studied the game process and behavior strategies of government and power producers in the implementation of a CT mechanism. This paper will fill this gap. This paper firstly constructs the evolutionary game model of government and power producers based on CT, and then simulates the evolutionary process of game behavior strategies by establishing a system dynamics (SD) model, and finally studies the influence of government controllable key factors on system stability. The combination of evolutionary game and SD in our study not only clearly reveals the complex and dynamic evolution process of game models under bounded rationality, but also provides a qualitative and quantitative simulation platform for analyzing the dynamic game process between government and power producers. The results show that: (1) There is no evolutionarily stable strategy (ESS) in the game system between government and power producers under CT, and the system evolution is characterized by periodicity; (2) When the government implements dynamic subsidies or punitive measures, the mixed strategy of the game system has ESS; (3) Reducing the unit subsidy and raising the unit fine can both promote the participation of power producers in CT, but the former increases the probability of government supervision; thus, it is best to increase the fines when the government makes strategic adjustments, followed by reducing subsidies.

Keywords: carbon trading; evolutionary game; behavior strategies; system dynamics (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
https://www.mdpi.com/2071-1050/10/4/1150/pdf (application/pdf)
https://www.mdpi.com/2071-1050/10/4/1150/ (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:gam:jsusta:v:10:y:2018:i:4:p:1150-:d:140575

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().