Research On The Carbon Emission Allowance Allocation And Operational Decision Under The Low-carbon Environment

The climate change caused by carbon emissions has disrupted human life and brought many troubles to people.In order to achieve the goal of sustainable development,more and more countries have offered to assume the responsibility of reducing emissions,and have carried out various types of emission reduction work in their countries.At present,the cap-and-trade policy has been seen by many countries and scholars as an efficient way to control carbon emissions.Under this policy,the carbon emissions generated from the operation of the firm will be limited.Every firm should make decisions in accordance with the carbon emission allowances they can receive from the government.This paper mainly studies the issues of carbon emission allowance allocation and the operational decision of the firm under the cap-and-trade policy.First,this paper analyzes the emission allowance allocation method of the government from the perspective of industry based on the newsvendor model.We find that the emission reduction investments of all firms may be considered when the government allocates the emission allowances.The allocated emission allowances are directly associated with the average actual carbon emission allowance requirement of the industry.Then,this paper focuses on studying the influence of the optimal emission allowance allocation method on the operational decisions of the firm.In this section,we assume that there are two firms with the different level of carbon reduction technology in the same industry.And we have obtained the equilibrium solutions of the two firms separately.The results show that the firm's optimal emission reduction investment will increase monotonously with carbon price,but will decrease with its own market share.In addition,when the firm adopts a higher level of carbon reduction technology,the emission gap between the actual carbon emissions and the allocated emission allowances will be closed.Finally,this paper further discusses the firms' optimal decisions through the numerical analysis,including the optimal production quantity,the firm's profit and so on.We find that as the firm improves its carbon reduction technological level,the firm can produce more products and obtain more profits.However,the improvement of other competitor's carbon reduction technological level will lead to the opposite result.Furthermore,the profit of the firm will also decrease with the government's weighting factor on carbon emissions.According to the conclusions obtained in this paper,we also offer some useful suggestions for the government and firms.For example,when other conditions are the same among firms,the new entrant should make more emission reduction investment to survive compared with the firms whose market share is larger in the same industry.And the new entrants should try their best to adopt a higher carbon reduction technological level which can help them reduce the carbon emission pressures.