ABSTRACT
Compared to traditional environment policies, emissions trading (ET) not only
has shown the strengths of both quality assurance and cost effectiveness, but has been
successfully put into practice abroad for over thirty years. So it has been an
impressive environment economic instrument that nearly all the countries follow and
utilize, and its related topics have also become even hot between academic and policy
discussion. However, the price of initial permit has been little concerned, and
market-based pricing mechanism does not exist at present. The pricing theory of
initial permits is still on the preliminary stage, fluctuated extensively and much
influenced by human behavior. In practice, trading price is mostly lower than the cost
of pollution abatement, which fails to indicate the rareness of this kind of
environmental resource.
The initial distribution, trading system and pricing mechanism is an important
issue for the performance of permits market, which, to a large extent, determines total
amount and degree of activeness for emission trading. It plays a critical role for
emission trading system to establish an effective pricing mechanism of initial permits.
It will fail to prevent pollution to protect environment and lost incentive for the
technique improvement of pollution abatement if price is too low. While, if price is
too high, it can cause heavy loan for firms and cannot make full use of the
environmental resource.
This paper firstly reviews the overall situation of emission trading home and
abroad, introduces the basic theory with model statement, and summarizes mainly
used study methods. Then a Cournot game model involving pollution emission and
abatement behavior is established, which will study the mutual influence between
market structure and emission trading, and provide the optimal permit pricing strategy
in duopoly market. Then price influent factors are summarized and analyzed, on
which system of indices for emission pricing is established, including supply demand
relationship, social integrated index, pollution abatement index, region environment
quality, expected permit price, trading period, trading cost, industry structure and
uncertainty index. Finally, based on the system of indices and given the boundary
limits of price, the pricing model is derived in the presence of fuzzy identifying theory.
And an example of emission trading for some future period in Wuxi is provided,
which turns out the pricing model seems feasible and rational in practice .while it may
be pretty difficult to collect and process the information and to determine