The evolutionary game analysis and simulation with system dynamics of manufacturer's emissions abatement behavior under cap-and-trade regulation

In the context of cap-and-trade regulation, this paper develops the models of evolutionary game between governments and manufacturers, and analyzes the impacts of government policy on the decisions of manufacturers and the dynamic tendency of cap-and-trade market. It investigates the impacts of government policies on carbon trading market under two scenarios: the static carbon trading price and the dynamic carbon trading price. Under dynamic carbon trading price, the equilibrium strategy of the evolutionary game can be obtained. Then a numerical example is examined with system dynamics simulation. It is shown that, when governments implement the static carbon trading price, the evolutionary game cannot reach the stability. Under the dynamic carbon trading price, the evolutionary game has the evolutionary stable strategy. Dynamic carbon trading pricing policy is effective in accelerating the carbon reduction. Moreover, the probability of manufacturers introducing green technology is negatively correlated with governmental intervention costs and positively correlated with governmental penalty for manufacturers’ speculations.