Carbon Market Regulation Mechanism Research Based on Carbon Accumulation Model with Jump Diffusion

Abstract EN

In order to explore carbon market regulation mechanism more effectively, based on carbon accumulation model with jump diffusion, this paper studies the carbon price from two perspectives of quantity instrument and price instrument and quantitatively simulates carbon price regulation mechanisms in the light of actual operation of EU carbon market.

The results show that quantity instrument and price instrument both have certain effects on carbon market; according to the comparison of the elasticity change of the expected carbon price, comparative advantages of both instruments rely on the price of carbon finance market.

Where the carbon price is excessively high, price instrument is superior to quantity instrument; where carbon price is excessively low, quantity instrument is better than price instrument.

Therefore, in the case of carbon market regulation based on expected carbon price, if the carbon price is too high, price instrument should prevail; if the carbon price is excessively low, quantity instrument should prevail.