{"title":"A Dynamic Game of Strategic Carbon Taxation and Energy Pricing with Green Technology Innovation","authors":"Xiao-Bing Zhang","doi":"10.1007/s13235-023-00541-8","DOIUrl":null,"url":null,"abstract":"Abstract This paper uses a dynamic game to investigate the strategic interactions between carbon taxation by a coalition of resource consumers and (wellhead) energy pricing by a producers’ cartel under the possibility of innovation in a cheap carbon-free technology. The timing of innovation is uncertain, but can be affected by the amount spent on R &D. The results show that the expectation of possible innovation decreases both the initial carbon tax and producer price, resulting in higher initial resource extraction and carbon emissions. Though this ’green paradox’ effect triggered by possible innovation also will appear in the cooperative case (without strategic interactions), the presence of strategic interactions between resource producers and consumers can somewhat restrain such an effect. For both the resource consumers and a global planner, the optimal R &D to stimulate innovation is an increasing function of the initial CO2 concentration. However, the resource consumers can over-invest in R &D relative to the investment level that a global planner would choose.","PeriodicalId":48933,"journal":{"name":"Dynamic Games and Applications","volume":"38 1","pages":"0"},"PeriodicalIF":1.8000,"publicationDate":"2023-11-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Dynamic Games and Applications","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1007/s13235-023-00541-8","RegionNum":4,"RegionCategory":"数学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"MATHEMATICS, INTERDISCIPLINARY APPLICATIONS","Score":null,"Total":0}
引用次数: 0
Abstract
Abstract This paper uses a dynamic game to investigate the strategic interactions between carbon taxation by a coalition of resource consumers and (wellhead) energy pricing by a producers’ cartel under the possibility of innovation in a cheap carbon-free technology. The timing of innovation is uncertain, but can be affected by the amount spent on R &D. The results show that the expectation of possible innovation decreases both the initial carbon tax and producer price, resulting in higher initial resource extraction and carbon emissions. Though this ’green paradox’ effect triggered by possible innovation also will appear in the cooperative case (without strategic interactions), the presence of strategic interactions between resource producers and consumers can somewhat restrain such an effect. For both the resource consumers and a global planner, the optimal R &D to stimulate innovation is an increasing function of the initial CO2 concentration. However, the resource consumers can over-invest in R &D relative to the investment level that a global planner would choose.
期刊介绍:
Dynamic Games and Applications is devoted to the development of all classes of dynamic games, namely, differential games, discrete-time dynamic games, evolutionary games, repeated and stochastic games, and their applications in all fields