Game Analasis Of Chinesecarbon Emissions Trading

In the context of global warming, carbon emissions trading as an effective economicinstrument to reduce greenhouse gas emissions has achieved excellent results in Europeand the United States and other developed countries, and the growing scale of the carbonmarket is expected to become the world’s largest energy trading market. Facing theworldwide tide of low-carbon, China has also accelerated the construction of a carbonemissions trading market. In the beginning of the construction, the relevant theoretical andapplied research about the carbon emissions trading is particularly important.This paper focuses on the theoretical analysis of China’s carbon emissions trading onthe background of Carbon emissions trading under the total quantity control of carbondioxide by using the main research methods of game theory and information economics. Inthe view of the efficiency of the carbon emissions trading market and the dynamicconsistency of the policy, the paper studies on the problems about the initial allocation ofpolicy design on free allocation of carbon emission rights, the influenceson the price ofcarbon emission rights in the flowing market, the formation ofcarbon emissions tradingand the auction about carbon emissions trading, in order to provide theoretical support andpolicy advices for the construction of China’s carbon emissions trading market.The emphasis, conclusions and innovation points of this paper are as follows:Firstly, this paper analyses the predicament of negotiation about market participants inthe free allocation of the carbon emission rights with game model. It proposes to adhere tothe principle of "common but differential" in the allocation of carbon emissions and tocoordinate the dilemmas of carbon emission rights allocation by carrying out regionalcarbon emissions trading projects,especially by drawing lessons from the successfulexperiences of the clean development mechanism.Around the dynamic consistency, the policy of allocation on the free permits of carbonemission rights is analysed by the model of Stackelberg. And some suggestions are given:the administrator should set the allocation quota based on the firms’ applying; and if theadministrator sets the allocation quota first, to follow the dynamic consistency, then thesame proportion of the allocation should be set and acted strictly. At the same timeegalitarianism is prevented, and the administrator should give more policy support to thefirms who have masterful ability of emission reduction and good reputation.Secondly, this paper analyses the price of carbon emission rights in the bilateral carbonmarket by the bargain game model of Rubinstein. The price is affected by the priceexpectations of buyers and sellers, the transaction costs. The paper gives some reasonabout the low price of CDM projects in our country, and proposes to strengthen theconstruction of an open carbon emissions trading market.The possibility of market power in China’s carbon emissions trading market is analysed,and a game model of a large number of firms participating in the carbon emissions tradingmarket is established by the model of Akira Maeda. The emergence of market power ismainly about the proportion of monopolist’s emission reduction and the ability ofmonopolist’s emission reduction. Furthermore, to ensure the balanced development of thecarbon emissions trading market, it is proposed that the government should pay attention to the initial allocation of carbon emission rights and popularize the technology ofemissionreduction.Thirdly,itispointed out that the regulation of government is theexternalfactorstopromotethe formation ofcarbonemissions trading through the model ofregulation game. Thetransaction costs and the leveloflow-carbon technologies are theinternal factors.Thusthe impact of transaction costs on firms trading behavior is analysedby the decision model under the supervision of government. It is shown that the reductionof transaction costs can ensure the participation of the carbon emissions trading marketunder the certain supervision of government and the current price. And the reduction oftransaction costs will further reduce the probability of the supervision of government. Thusit will enhance the efficiency of government’s regulation.The main factors for the transaction of low-carbon technologies in CDM project isanalyzed with the model of Holstrom and Milgrom. It is shown that the amount oftechnology in the transaction is reduced by the increased sellers’ cost of technologytransaction, the increased purchasers’ cost of technology absorption, the increased seller’srisk aversion coefficient and the increased variance of technology transaction. At last thepaper puts forward some recommendations to promote the transaction of low-carbontechnologies, providing incentives for the construction and formationof the carbonemissions trading market.Fourthly, the multi-round first-price sealed-bid auction model with budget constraintsand commission constraints is established by using auction theory towards the actualcircumstances of carbon emissions trading. The bidders’ bid strategies and auctionparticipants’ expected profit are given out and analysed. It is shown that the bidders’ bidnumber and expected profit are affected by budget constraints; the bidders’ bid price isaffected by commission constraints; the expected profit of the auctioneer and the auctionhouse is affected by both the constraints.On the base of Zero-Intelligence model and the model of Chatterjee and Samuelson, adouble auction model is established. Under the conditions of buyers and sellers valuefollowing the uniform distribution and the transaction price reflecting the administrator’spartiality, the participants’ linear Bayesian-Nash equilibrium strategiesare given out. Theseconclusions give the suggestions to both the auction mechanism and the direct purchasenegotiated transactions in the construction of carbon emissions trading.