Yanhong Yuan

This paper focuses on the optimal strategic choice of carbon trading and carbon reduction technology investment under the cap-and-trade system. We consider a carbon-dependent production enterprise that trades carbon emission rights or invests in carbon reduction technologies under the regulation of the cap-and-trade system. The enterprise undertakes corporate environmental responsibility (CER) and aims to maximize the comprehensive benefits of both the economy and the environment. Using numerical simulation, we analyze the impacts of the CER coefficient and initial carbon quotas on the comprehensive benefits, optimal emission reduction rate, and production quantity of the enterprise. Our main contribution is studying the low-carbon strategic option for CER production enterprises to maximize the comprehensive benefits by trading carbon emission permits or investing in carbon emission reduction technologies. We found that the carbon emission trading mechanism plays an important role in promoting enterprises to reduce carbon emissions and is a beneficial supplement to the carbon cap policy. Under different initial carbon quotas allocated by the government, the manufacturer strategically chooses to trade carbon emission rights or invest in carbon reduction technologies. CER is a significant factor in encouraging companies to reduce carbon emissions proactively.