Border Carbon Adjustment and China’s Optimal Environmental Tax: A Theoretical Analysis Based on Oligopoly Competition Model

Abstract

A two-stage game model was established against the backdrop of border carbon adjustment imposed by foreign countries, with a focus on exploring the impact of border carbon adjustment imposed by foreign countries on the output and profits of domestic export enterprises. Besides, the decision on the optimal environmental tax in China under border carbon adjustments was further discussed. This article argues that the imposition of border carbon adjustment by foreign countries will reduce the balanced export volume and export profits of domestic export enterprises, while also increasing the profits of foreign enterprises; the decision on the optimal domestic environmental tax depends on the tax rate of border carbon adjustment imposed by foreign countries. The higher the border carbon adjustment rate imposed by foreign countries on our country, the higher the optimal domestic environmental tax rate in China. The lower the border carbon adjustment rate imposed by foreign countries on our country, the lower the optimal domestic environmental tax rate in China. Based on these conclusions, relevant policy recommendations were proposed.

The Role of Industrial Structure in the Impact of Environmental Regulation on Carbon Productivity

“…Li Qiang (2013) studied the impact of environmental regulation on industrial structure adjustment based on the Baumol model, and made empirical analysis with provincial data. The results showed that environmental regulation will increase the proportion of service industry relative to industry, so as to optimize the [12] of industrial structure adjustment. Zhong Maochu, mengjie li and Du Weijian (2015) based on theoretical analysis and empirical analysis of the provincial data studied the environmental regulation of pollution industry transfer and structure upgrade, the results show that the relationship between environmental regulation and industrial structure is a U curve, only environmental regulation strength over a certain level to achieve the effect of promoting industrial upgrading, and further to reversed transmission industrial structure adjustment of the most effective environmental regulation to explore [13].…”