Production decision with carbon taxes and green-tech in a duopoly market

Abstract

Based on the background of the world's low-carbon economy development, this paper takes two manufacturers in a duopoly market as our target objects, and studies the production decision after low-carbon regulations in a duopoly market, besides we establish revenue functions after taking green-tech input into consideration under none carbon emissions limit and carbon tax policy, thus getting manufacturers' optimal decisions. Through analysis above all, we find that manufacturers' optimal production decisions will be affected by the carbon tax policy, as a result, manufacturers should cooperate with each other and avoid the impact of carbon tax policy on profits as far as possible through centralized decision making in a duopoly market. Although green-tech input increases the manufacturer's cost, it improves products' green level and reduces the carbon emissions thus achieving the government's goal of developing low-carbon economy.