Carbon emission policy with privatization in an oligopoly model

This paper constructs a mixed oligopoly model composed of a public enterprise and two private enterprises, and explores the equilibrium results under different carbon emission policies. In addition, this paper also analyzes the optimal carbon emission trading price and the optimal privatization level decision. The results show that the proportion of state-owned shares and the equity efficiency gap have impacts on the equilibrium results under different carbon emission policies. Privatization increases the profits of public firm but does not necessarily promote social welfare. Different carbon emission policy decisions have different impacts on the equilibrium results, and the emission reduction target is not completely consistent with the maximum social welfare target. The government can intervene by setting carbon emissions trading prices and making privatization decisions. Both full and partial privatization may be the optimal decision.