Risk and self-optimization analysis of the carbon tax policy based on scenario simulation

Abstract

The double dividend of the carbon tax policy has been a controversial topic. To comprehensively evaluate the benefits and risks brought by the carbon tax policy and contribute to China’s emission reduction goals, this paper establishes a carbon tax policy cycle simulation model based on China’s economic and energy data from 2010 to 2020 to explore the winner-curse phenomenons of the policy. To alleviate the winner’s curse of the carbon tax policy, this paper introduces a consumer behavior model to explore the optimization degree of loss aversion effect on the carbon tax policy. The research results show that the carbon tax policy has three kinds of winner’s curse phenomenons, namely, the improvement of environmental quality and the reduction of market capital, the decline of national carbon intensity and the increase of carbon intensity of three major industries, and the reuse of the tax revenue and the increase of economic loss. The loss aversion of consumers can alleviate the negative effect of the carbon tax policy and strengthen the positive effect. In addition, during the implementation of the carbon tax policy, the loss aversion effect can also reduce the polluted population by about 2%. Finally, based on the research results, the paper puts forward some feasible policy suggestions.

Keywords

• carbon tax policy
• double dividend
• winner’s curse
• loss aversion effect
• health risk