Carbon trading system for road freight transport: the impact of government regulation

This paper investigates the influence of carbon trading system on road freight transport industry. The framework of the carbon trading system is defined by six criteria. Using a cost-benefit model, optimal strategies of road freight companies and equilibrium carbon credit price are discussed in different situations of carbon trading market. Furthermore, the effect of government regulation to road freight industry is analyzed through numerical simulations based on data from China. By changing the penalty level and the ratio of free carbon credits, government can reduce the CO2 emission and increase the average profit emission ratio of the road freight industry indirectly through carbon trading system.