Abstract
This paper studied the influence of the introduction of carbon trading market to small size highway freight companies in China. The methodology is the cost-benefit model of freight transportation. The analysis is from both company side and governmental side. According to the analysis results, companies have three different best responses depending on the unit transport profit, carbon credit price and over emission penalty. If the carbon trading market is perfectly competitive, companies’ profit will be reduce in the long run after introducing the carbon trading market. But the government could regulate the companies’ profit indirectly by free carbon credits rate and penalty level of over emission.
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