Abstract
PurposeThere are certain differences in the production products of enterprises. What are the impacts of product differentiation on the iron and steel industry? Based on the macro background of CO2emission reduction, this paper aims to analyze the economic benefits and environmental changes of the iron and steel industry under the dual influence of CO2emission reduction policy and product differentiation policy.Design/methodology/approachTaking the basic data of iron and steel industry in six regions of China as an example, this paper constructed an extended two-stage dynamic game model to analyze the impact of product differentiation and carbon tax policy on the production, economic indicators and CO2emission levels for the overall industry and regional enterprises.FindingsAs the CO2emission reduction target increased, the unit carbon tax and total tax increased, whereas the macro-environmental losses, social welfare, consumer surplus and outputs decrease. Emission reduction pressures and other economic indicators showed obvious regional differences. Differentiated products promoted various indicators of enterprises and industries; higher degrees of product differentiation resulted in greater promoting effects on economic indicators.Originality/valueThis paper constructed multiple emission reduction and production backgrounds, and discusses the impact of the comprehensive implementation of these policies, which has been practically absent in previous studies. The results of this study are consistent with the current industrial policy for stable production and environmental protection, and also provides a reference for the formulation of detailed policies in the future.
Highlights
The iron and steel industry is an indispensable sector for China’s economic development
This paper focuses on the impact of product differentiation and emission reduction policies on the production and CO2 emission reduction of the steel industry
Because this paper only introduces the theory of product differentiation and bounded rationality based on a basic model, the model structure and main hypothesis do not differ from those of Duan et al (2017)
Summary
The iron and steel industry (hereinafter referred to as the “steel industry”) is an indispensable sector for China’s economic development. The “Steel Industry Adjustment and Upgrading Plan (2016–2020)” noted that China’s crude steel output reached a historical peak of 820 million tons in 2014 as a consequence of rising demand. The comprehensive energy consumption per ton of steel (equivalent to standard coal) of key large and medium-sized enterprises decreased from 605 kg to 572 kg and the sulfur dioxide emission per ton of steel decreased from 1.63 kg to 0.85 kg. The emission of fume and dust per ton of steel decreased from 1.19 kg to 0.81 kg, and the new water consumption per ton of steel decreased from 4.10 tons to 3.25 tons, reaching the “Twelfth Five-Year Plan” target.
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