Research on enterprise strategy in carbon market from allocation of quota

Abstract

The different allocations of initial carbon emissions quotas has far-reaching influence on carbon trading enterprises. Based on the dynamic game model, this paper studies the two kinds of free allocations' impact on trading price and enterprises' profits in the carbon market, and takes the power industry as an example to test the above research conclusions. It shows that: Grandfathering is more benefit for the high emission enterprises; Under the out-based allocation, low emission enterprises earn more and emission less; Detailed initial quota allocations of carbon emissions according to different industry could effectively motivate enterprises to choose the low emission strategy.