The Impact of Government's Carbon Tax Policy on Enterprise's Carbon Emission

Abstract

Enterprise is the main energy consumer and carbon emitter in an economy, how to reduce the enterprise's carbon emission during the processes of production is an important standard to evaluate effectiveness of the government's carbon tax policy. By establishing a carbon tax model for a representative enterprise, this paper analysis the changes of inputs factor price how to affect the production decision, and the resulting carbon reduction emission effects under the different government's carbon tax policies. The results indicate that the carbon reduction emission effects are based on many factors, such as the substitution effect, income effect and interaction effect of carbon tax programs, the cost of carbon taxation, and the elasticity of inputs factors. Based on the optimal carbon reduction emission, we give the corresponding carbon tax rates and the tax subsidies, which provide an idea for the government to implement carbon tax policy in low-carbon economy.