Game Analysis of Green Technology Implementation with Green Consumption Preference Considered under Cap-and-Trade Scheme

Abstract

Under the scheme of Cap-and-Trade, carbon emissions have become important constraints that generating companies have to take into consideration when making their operational decisions, especially for the product pricing and green technology selection. In this paper, a two-party (one greener and one dirtier manufacturer) game model with green consumption preference considered is proposed. The equilibrium conditions including optimal prices and selection of green technology under different combinations of strategies are obtained. The study finds that whether greener or dirtier manufacturer will implement green technology mainly depends on different scenarios of cost and carbon emission reduction of green technology, and carbon emission for producing per unit of product. How to establish an effective mechanism to make both manufacturers cooperate in green technology implementation and carbon emission reduction is an interesting future research direction.