China s optimal strategy against the european union aviation carbon tax scheme: a two-stage game model analysis

Qiao Han1, Nan Song2, Bo Lu1,3, Guowei Hua4, Helen S. Du5

1 University of Chinese Academy of Sciences, School of Management, Beijing 100190, China
2 Chinese Academy of Sciences, Institute of High Energy Physics, Beijing 100049, China
3 Dalian University, Institute of E-Commerce and Modern Logistics, Dalian 116622, China
4 Beijing Jiaotong University, School of Economics and Management, Beijing100044, China
5 Guangdong University of Technology, School of Management, Guangzhou 510520, China

Abstract


A two-stage game model is proposed in this paper to study how China can best respond to the European Union (EU) Aviation Carbon Tax Scheme. Four possible strategies of China can be chosen, including non-resistance , refusal of pay , retaliatory duties and credible threat . The analytic result shows that the strategy refusal of pay makes a consensus with the Chinese policy as an optimal strategy for China. The main contribution of this paper is to study a heated divergence on aviation carbon tax by using a two-stage game model.

Keywords


aviation carbon tax (ACT); equilibrium; optimal strategy; two-stage game

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