Influencing Factors Of Transaction Incentives Of Emissions Trading Market In China: An Empirical Study

As the fast development of economy of China, the livelihood of Chinese people has been improved. However, impacts of the polluted environment become more and more obvious. How to strike a balance between economic development and the protection of environment is a burning problem need to be resolved in the process of seeking economic and social development.Emissions trade is an important market-based instrument for managing the environment capacity. It is also the major work for solving the external problems of environmental pollution. Dales Theory is practiced in the USA. Carbon emission has been adopted in Europe. That shows emission trading is becoming more and more important. In the 1980s, China began its first pilot project of emission trading in Shanghai. In 2001, China stated to develop pilot project of emission trading of various type, implying that China has established its own emission trading model. However, problems such as "zero supply", "murky market", lack of standardization and the absence of an effective supervision system all impair the effectiveness of the tradable permits system. The difficulties are improving the emission trading system, lower policy cost and promote efficiency. This study begins with the analysis of the trading intention in the permits market and searches for the factors affecting the permits trading, in order to find out a way to activate the emission trading market and some relevant policies and to provide reference to the establishment of the system.The current study adopts a research method combining normative analysis and empirical analysis. The author managed to collect 232 sample statistics of emission factories in 12 sectors from 11 provinces in China in the source of local environmental protection agencies, regional associations, business and industrial organizations and private networks. The study adopts SEM Model to analyze direct and indirect influence of the hypothetical factors on trading incentives of these subjects. It tests the presumption of the normative analysis and put forward relevant policy suggestions based on the empirical conclusion. The three main achievements of the paper are as below:(1) Classification of the factors influencing the transaction intention of emission into four categories transaction cost, transaction value, transaction environment and technical innovation, which are described by 14 observe variables, and a hypothesis test is posed on the relations between the transaction intention and its influents. (2) Ranking of influencing factors of the transaction factors is made and according to the hypothesis testing results. And look into the routes the factors take effect. (3) Applying research conclusion and the current practice of emission trade, policy suggestions about institution design, enforcement and surveillance of institution, region allocation, assessment of government officials and violation punishment are made.