IDEAS home Printed from https://ideas.repec.org/a/eee/energy/v274y2023ics036054422300659x.html
   My bibliography  Save this article

Research on the evolutionary strategy of carbon market under “dual carbon” goal: From the perspective of dynamic quota allocation

Author

Listed:
  • Qi, Xiaoyuan
  • Han, Ying

Abstract

Carbon trading is an effective tool to reduce emissions. And the implementation of the policy requires the cooperation of all participants in the carbon market, then it will cause a contradiction between social benefits and individual benefits. To break the dilemma faced by the carbon market, it is necessary to fully consider the behavioral strategies of all participants. However, no known literature discusses the effect of quota allocation under the banking mechanism on the behavior strategies of carbon market participants from the limited rational perspective. This paper analyzes the effect of the banking mechanism on each party's strategy in the carbon market. Results show that, under the regulation of the carbon trading management center, the promotion of carbon trading policy is separated into four periods, respectively, policy trial, policy promotion, policy adjustment, and policy stability. The evolutionary stability equilibrium represents the optimal equilibrium point of the system. Adopting a banking mechanism do not affect the outcome of evolutionary stability equilibrium, but has an effect on the rate convergence to the evolutionary stability equilibrium. The findings can be utilized as a guide for accelerating the achievement of the carbon-neutral goal, perfecting the carbon market mechanism, and creating targeted emission-reduction incentive policies.

Suggested Citation

  • Qi, Xiaoyuan & Han, Ying, 2023. "Research on the evolutionary strategy of carbon market under “dual carbon” goal: From the perspective of dynamic quota allocation," Energy, Elsevier, vol. 274(C).
    • Handle: RePEc:eee:energy:v:274:y:2023:i:c:s036054422300659x
    DOI: 10.1016/j.energy.2023.127265
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S036054422300659X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.energy.2023.127265?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Zhongxiang Zhang, 2015. "Carbon emissions trading in China: the evolution from pilots to a nationwide scheme," Climate Policy, Taylor & Francis Journals, vol. 15(sup1), pages 104-126, December.
    2. Zhang, Yue-Jun & Peng, Yu-Lu & Ma, Chao-Qun & Shen, Bo, 2017. "Can environmental innovation facilitate carbon emissions reduction? Evidence from China," Energy Policy, Elsevier, vol. 100(C), pages 18-28.
    3. repec:dau:papers:123456789/4222 is not listed on IDEAS
    4. Zhang, Yue-Jun & Wei, Yi-Ming, 2010. "An overview of current research on EU ETS: Evidence from its operating mechanism and economic effect," Applied Energy, Elsevier, vol. 87(6), pages 1804-1814, June.
    5. Ibikunle, Gbenga & Gregoriou, Andros & Hoepner, Andreas G.F. & Rhodes, Mark, 2016. "Liquidity and market efficiency in the world's largest carbon market," The British Accounting Review, Elsevier, vol. 48(4), pages 431-447.
    6. Chao-Ning Liao, 2007. "Modelling a mixed system of air pollution fee and tradable permits for controlling nitrogen oxide: a case study of Taiwan ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(4), pages 475-490, December.
    7. Liao, Chao-Ning, 2007. "Modelling a mixed system of air pollution fee and tradable permits for controlling nitrogen oxide: a case study of Taiwan," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(4), pages 1-16.
    8. Alberola, Emilie & Chevallier, Julien & Cheze, Benoi^t, 2008. "Price drivers and structural breaks in European carbon prices 2005-2007," Energy Policy, Elsevier, vol. 36(2), pages 787-797, February.
    9. Streimikiene, Dalia & Roos, Inge, 2009. "GHG emission trading implications on energy sector in Baltic States," Renewable and Sustainable Energy Reviews, Elsevier, vol. 13(4), pages 854-862, May.
    10. Thomas Stoerk & Daniel J. Dudek & Jia Yang, 2019. "China’s national carbon emissions trading scheme: lessons from the pilot emission trading schemes, academic literature, and known policy details," Climate Policy, Taylor & Francis Journals, vol. 19(4), pages 472-486, April.
    11. Restiani, Phillia & Betz, Regina, 2010. "The Effects of Penalty Design on Market Performance: Experimental Evidence from an Emissions Trading Scheme with Auctioned Permits," Research Reports 107586, Australian National University, Environmental Economics Research Hub.
    12. Bredin, Don & Hyde, Stuart & Muckley, Cal, 2014. "A microstructure analysis of the carbon finance market," International Review of Financial Analysis, Elsevier, vol. 34(C), pages 222-234.
    13. Junming Zhu & Yichun Fan & Xinghua Deng & Lan Xue, 2019. "Low-carbon innovation induced by emissions trading in China," Nature Communications, Nature, vol. 10(1), pages 1-8, December.
    14. Zhao, Xin-gang & Jiang, Gui-wu & Nie, Dan & Chen, Hao, 2016. "How to improve the market efficiency of carbon trading: A perspective of China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 59(C), pages 1229-1245.
    15. William A. Pizer & Brian C. Prest, 2020. "Prices versus Quantities with Policy Updating," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 7(3), pages 483-518.
    16. Zhe Deng & Dongya Li & Tao Pang & Maosheng Duan, 2018. "Effectiveness of pilot carbon emissions trading systems in China," Climate Policy, Taylor & Francis Journals, vol. 18(8), pages 992-1011, September.
    17. Junjie Zhang & Zhenxuan Wang & Xinming Du, 2017. "Lessons learned from Chinas regional carbon market pilots," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
    18. Gao, Yuning & Li, Meng & Xue, Jinjun & Liu, Yu, 2020. "Evaluation of effectiveness of China's carbon emissions trading scheme in carbon mitigation," Energy Economics, Elsevier, vol. 90(C).
    19. Alex Y. Lo, 2016. "Challenges to the development of carbon markets in China," Climate Policy, Taylor & Francis Journals, vol. 16(1), pages 109-124, January.
    20. Martin L. Weitzman, 2020. "Prices or Quantities Can Dominate Banking and Borrowing," Scandinavian Journal of Economics, Wiley Blackwell, vol. 122(2), pages 437-463, April.
    21. Geng, Wenxin & Fan, Ying, 2022. "An imperfectly competitive permit market under a rate-based scheme," Energy Economics, Elsevier, vol. 105(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jung, Jihyeok & Moon, Saedaseul & Yeo, Sangmin & Lee, Deok-Joo, 2023. "How would the carbon market affect the choice of input factors for production? A duopolistic model," Energy, Elsevier, vol. 282(C).
    2. Wu, Xiaoping & Liu, Peng & Yang, Lin & Shi, Zhuangfei & Lao, Yongshuai, 2024. "Impact of three carbon emission reduction policies on carbon verification behavior: An analysis based on evolutionary game theory," Energy, Elsevier, vol. 295(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yan, Kai & Zhang, Wei & Shen, Dehua, 2020. "Stylized facts of the carbon emission market in China," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 555(C).
    2. Lyu, Chenyan, 2021. "Regional Carbon Markets in China: Cointegration and Heterogeneity," Working Papers 13-2021, Copenhagen Business School, Department of Economics.
    3. Cong, Ren & Lo, Alex Y., 2017. "Emission trading and carbon market performance in Shenzhen, China," Applied Energy, Elsevier, vol. 193(C), pages 414-425.
    4. Yu, Jian & Liu, Peng & Shi, Xunpeng & Ai, Xianneng, 2023. "China’s emissions trading scheme, firms’ R&D investment and emissions reduction," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 1021-1037.
    5. Chang, Chia-Lin & Mai, Te-Ke & McAleer, Michael, 2019. "Establishing national carbon emission prices for China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 106(C), pages 1-16.
    6. Zhao, Lili & Wen, Fenghua & Wang, Xiong, 2020. "Interaction among China carbon emission trading markets: Nonlinear Granger causality and time-varying effect," Energy Economics, Elsevier, vol. 91(C).
    7. Yue-Jun Zhang & Jing-Yue Liu, 2019. "Does carbon emissions trading affect the financial performance of high energy-consuming firms in China?," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 95(1), pages 91-111, January.
    8. Chen, Zhongfei & Zhang, Xiao & Chen, Fanglin, 2021. "Do carbon emission trading schemes stimulate green innovation in enterprises? Evidence from China," Technological Forecasting and Social Change, Elsevier, vol. 168(C).
    9. Xie, Qiwei & Hao, Jingjing & Li, Jingyu & Zheng, Xiaolong, 2022. "Carbon price prediction considering climate change: A text-based framework," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 382-401.
    10. Wang, Xiao-Qing & Su, Chi-Wei & Lobonţ, Oana-Ramona & Li, Hao & Nicoleta-Claudia, Moldovan, 2022. "Is China's carbon trading market efficient? Evidence from emissions trading scheme pilots," Energy, Elsevier, vol. 245(C).
    11. Tiwari, Aviral Kumar & Abakah, Emmanuel Joel Aikins & Le, TN-Lan & Leyva-de la Hiz, Dante I., 2021. "Markov-switching dependence between artificial intelligence and carbon price: The role of policy uncertainty in the era of the 4th industrial revolution and the effect of COVID-19 pandemic," Technological Forecasting and Social Change, Elsevier, vol. 163(C).
    12. Chunyu Pan & Anil Kumar Shrestha & Guangyu Wang & John L. Innes & Kevin Xinwei Wang & Nuyun Li & Jinliang Li & Yeyun He & Chunguang Sheng & John-O. Niles, 2021. "A Linkage Framework for the China National Emission Trading System (CETS): Insight from Key Global Carbon Markets," Sustainability, MDPI, vol. 13(13), pages 1-15, July.
    13. Friedrich, Marina & Mauer, Eva-Maria & Pahle, Michael & Tietjen, Oliver, 2020. "From fundamentals to financial assets: the evolution of understanding price formation in the EU ETS," EconStor Preprints 196150, ZBW - Leibniz Information Centre for Economics, revised 2020.
    14. Zhang, Yue-Jun & Peng, Yu-Lu & Ma, Chao-Qun & Shen, Bo, 2017. "Can environmental innovation facilitate carbon emissions reduction? Evidence from China," Energy Policy, Elsevier, vol. 100(C), pages 18-28.
    15. Federico Galán-Valdivieso & Elena Villar-Rubio & María-Dolores Huete-Morales, 2018. "The erratic behaviour of the EU ETS on the path towards consolidation and price stability," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 18(5), pages 689-706, October.
    16. Cenjie Liu & Chunbo Ma & Rui Xie, 2020. "Structural, Innovation and Efficiency Effects of Environmental Regulation: Evidence from China’s Carbon Emissions Trading Pilot," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 75(4), pages 741-768, April.
    17. Zhang, Weijie & Zhang, Ning & Yu, Yanni, 2019. "Carbon mitigation effects and potential cost savings from carbon emissions trading in China's regional industry," Technological Forecasting and Social Change, Elsevier, vol. 141(C), pages 1-11.
    18. Chen, Yingqi & Ba, Shusong & Yang, Qing & Yuan, Tian & Zhao, Haibo & Zhou, Ming & Bartocci, Pietro & Fantozzi, Francesco, 2021. "Efficiency of China’s carbon market: A case study of Hubei pilot market," Energy, Elsevier, vol. 222(C).
    19. Chang, Kai & Ye, Zhifang & Wang, Weihong, 2019. "Volatility spillover effect and dynamic correlation between regional emissions allowances and fossil energy markets: New evidence from China’s emissions trading scheme pilots," Energy, Elsevier, vol. 185(C), pages 1314-1324.
    20. Lo, Alex Y & Mai, Lindsay Qianqing & Lee, Anna Ka-yin & Francesch-Huidobro, Maria & Pei, Qing & Cong, Ren & Chen, Kang, 2018. "Towards network governance? The case of emission trading in Guangdong, China," Land Use Policy, Elsevier, vol. 75(C), pages 538-548.

    More about this item

    Keywords

    Carbon neutrality; Carbon market; Emission trading; Banking mechanism; Evolutionary game;
    All these keywords.

    JEL classification:

    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:energy:v:274:y:2023:i:c:s036054422300659x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/energy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.