Carbon Tax for Energy-Intensive Industries: A Game Model from the Perspective of Industrial Agglomeration

Abstract

Regarding the pressing need to reduce carbon emissions in energy-intensive industries, this paper highlights how carbon tax policies impinge on industrial agglomeration. It notes that existing studies often overlook how carbon taxes affect varied enterprises within these industries, potentially hindering sustainable development and industrial transformation. To address this gap, the study categorizes enterprises into four groups: leading, following, ordinary, and backward, and establishes a game model to take a look at how carbon tax policies affect these kinds of corporations economically and environmentally. The findings reveal that carbon tax policies drive industrial upgrading by phasing out outdated businesses and lowering carbon emissions. These enterprises are unable to sustain increased costs due to the tax, while others upgrade their processes and technologies in response. The study also explores how different carbon tax policies affect decision-making and emissions in these industries. It reveals that the number of upgrading enterprises influences product demand, carbon emissions, and industry profits. As backward enterprises diminish, demand for remaining enterprises’ products grows, affecting the overall market and profit dynamics.

Keywords: carbon tax policy, energy-intensive industries, game theory, Industrial agglomeration