Description:
In July 2021, China established a nationwide carbon emissions trading market. Based on international experience and the Chinese government's plan, China is expected to introduce a carbon tax system next. The future carbon market and carbon tax system will be promoted simultaneously. Therefore, it is worth discussing which situation should prioritize the carbon market system and which situation should prioritize the carbon tax system. This paper establishes an oligopoly market model with repeated games and compares the Nash equilibrium points under the carbon trading system and the carbon tax system. It is found through analysis that under the conditions of oligopoly, bounded rationality, and lack of price elasticity, if the carbon tax price can be set according to the carbon emissions clearance price of the carbon market, both the carbon trading system and the carbon tax system can achieve the same emission reduction effect. According to this finding, if a region already has a regional carbon market with lack of price elasticity and oligopoly, the carbon tax price should be set based on the carbon emissions clearance price of the market to manage emissions sources not included in the carbon market. It is also recommended to consider breaking the oligopoly to improve emission reduction efficiency or dissolving the carbon market and using the carbon tax system to save management costs. For regions that have not yet introduced a carbon pricing system, if it is expected to form an oligopoly carbon market with lack of price elasticity, considering the lower government management costs and lower business risks and wider coverage of the carbon tax system, the carbon tax system should be prioritized