# Emission-reduction cooperation among technologically complementary manufacturers under a carbon cap-and-trade mechanism with price competition

## TL;DR

This study explores how manufacturers can cooperate to reduce emissions while competing in a market with a carbon cap-and-trade system.

## Contribution

A biform game model is developed to analyze emission reduction cooperation among technologically complementary manufacturers.

## Key findings

- High carbon emission reduction investment coefficients hinder abatement and profits.
- Carbon trading prices significantly boost emission reductions and profits.
- Improved technological conversion capability enhances carbon abatement and profitability.

## Abstract

In recent years, driven by emission reduction targets, an increasing number of manufacturers producing similar products have been compelled to seek emission reduction cooperation even while competing in the market, a phenomenon that has attracted growing attention in recent studies. Based on the carbon cap-and-trade mechanism, this study develops a noncooperative–cooperative biform game model to examine the optimal decisions of technologically complementary manufacturers engaging in emission reduction cooperation under price competition. The model describes alliance profits using a characteristic function and applies the Shapley value for profit allocation, while equilibrium outcomes are derived through noncooperative game analysis. The research results show that the high carbon emission reduction investment coefficient will inhibit the carbon abatement development level of manufacturers and reduce their profits. Without a carbon cap-and-trade mechanism, competitive manufacturers lack incentives for technological collaboration. An increase in carbon trading prices significantly promotes emission reductions and profit growth, whereas the effect of government-allocated initial carbon allowances remains limited. Moreover, the improvement of manufacturers’ technological conversion capability can improve the level of carbon abatement development and enhance their profitability under price competition. In general, this study provides theoretical and practical guidance for the cooperative emission reduction of competitive enterprises under the carbon emission rights trading mechanism.