Gaming Analysis for Behaviors of the Enterprises Involving Emission Trading

Focusing on the shortcomings of emission trading study in China, the authors analyze the gaming practice of decision making process of enterprises, to extend the studies on emission trading via micro behavior analysis. The paper identifies that transaction cost, definition and allocation of initial emission rights, differential of marginal abatement costs, numbers of enterprises involving emission trading scheme are the key elements and factors that influencing the decisions and behaviors of enterprises in China. Based on the analysis, the authors further provided policy recommendations for developing emission trading policy in China,where there should be full considerations of initial allocation of quotas, and to set up regulations to avoid the possible market and political risks identified, and to implement trans-boundary trading practice to ensure the scale of emission trading market and reducing the transaction costs.