Competitive firms’ low-carbon technology diffusion under pollution regulations: A network-based evolutionary analysis

Abstract

To investigate the diffusion degree of low-carbon technology in competitive firms and the influence of different pollution regulations, we constructed an evolutionary game model representing three environmental mechanisms: total amount control and trading, carbon tax, and subsidy, within a complex firm network. By analyzing the effects of carbon quotas, tax rates, and subsidy rates, we comprehensively assessed the performance of these mechanisms in terms of diffusion degree, firm profits, consumer surplus, environmental damage, and social welfare. The study results demonstrated distinct outcomes for each environmental mechanism. Under the subsidy mechanism, low-carbon technology exhibited the highest diffusion degree, suggesting its efficacy in promoting widespread adoption. However, it is worth noting that the higher the subsidy, the more environmental pollution it led to, which presents a trade-off between environmental benefits and financial incentives. On the other hand, the carbon tax mechanism resulted in minimal pollution, reflecting its potential as an effective tool for environmental regulation. Finally, the cap-and-trade mechanism emerged as the most favorable option, as it maximized social welfare while effectively addressing environmental concerns.