IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v16y2024i8p3113-d1372386.html
   My bibliography  Save this article

Impacts of Carbon Border Adjustment Mechanism on the Development of Chinese Steel Enterprises and Government Management Decisions: A Tripartite Evolutionary Game Analysis

Author

Listed:
  • Borui Tian

    (School of Energy and Environmental Engineering, University of Science and Technology Beijing, Haidian, Beijing 100083, China)

  • Mingyue Zheng

    (China Center for Information Industry Development, Haidian, Beijing 100083, China)

  • Wenjie Liu

    (School of Energy and Environmental Engineering, University of Science and Technology Beijing, Haidian, Beijing 100083, China
    Shunde Graduate School, University of Science and Technology Beijing, Foshan 528399, China)

  • Yueqing Gu

    (School of Energy and Environmental Engineering, University of Science and Technology Beijing, Haidian, Beijing 100083, China)

  • Yi Xing

    (School of Energy and Environmental Engineering, University of Science and Technology Beijing, Haidian, Beijing 100083, China)

  • Chongchao Pan

    (School of Energy and Environmental Engineering, University of Science and Technology Beijing, Haidian, Beijing 100083, China
    Shunde Graduate School, University of Science and Technology Beijing, Foshan 528399, China
    School of Energy and Environment, City University of Hongkong, Hongkong 999077, China)

Abstract

Upon the implementation of the European Union Carbon Border Adjustment Mechanism (CBAM), substantial challenges are anticipated to impact the international trade of Chinese steel products. To safeguard the competitiveness of Chinese steel products on the global stage, this paper establishes a tripartite evolutionary game model, involving large steel enterprises, small- and medium-sized steel enterprises, and the government. The model integrates collaborative emission reduction and free-riding benefits among enterprises, along with the government’s dynamic subsidies and penalties. First, we calculate the replicator dynamic equations and conduct stability analysis to obtain the evolutionary trends and system equilibrium points in different phases of the CBAM. Then, we validate the evolutionary theoretical analysis of the model through example simulation analysis. Finally, we explore the impact of different parameters on the agents through a sensitivity analysis of parameters. The findings indicate that (1) large enterprises demonstrate greater sensitivity to CBAM, making their production structures more susceptible to changes in CBAM policies; (2) small- and medium-sized enterprises are more prone to free-riding behavior influence; (3) government intervention should be kept within appropriate boundaries, as excessive intervention may lead to strategic oscillation, with passive management being chosen by the government during the strengthening phase of CBAM; (4) elevating the price in the Chinese carbon market would slow down the structural changes in the production of Chinese steel enterprises, serving as an effective measure to counteract the impacts of CBAM. This paper provides theoretical support for how steel enterprises and the government can respond to CBAM, aiding stakeholders in selecting optimal strategies during different implementation stages and mitigating the impacts of the CBAM to the maximum extent possible.

Suggested Citation

  • Borui Tian & Mingyue Zheng & Wenjie Liu & Yueqing Gu & Yi Xing & Chongchao Pan, 2024. "Impacts of Carbon Border Adjustment Mechanism on the Development of Chinese Steel Enterprises and Government Management Decisions: A Tripartite Evolutionary Game Analysis," Sustainability, MDPI, vol. 16(8), pages 1-32, April.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:8:p:3113-:d:1372386
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/16/8/3113/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/16/8/3113/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Bellora, Cecilia & Fontagné, Lionel, 2023. "EU in search of a Carbon Border Adjustment Mechanism," Energy Economics, Elsevier, vol. 123(C).
    2. Overland, Indra & Sabyrbekov, Rahat, 2022. "Know your opponent: Which countries might fight the European carbon border adjustment mechanism?," Energy Policy, Elsevier, vol. 169(C).
    3. Matto Mildenberger & Erick Lachapelle & Kathryn Harrison & Isabelle Stadelmann-Steffen, 2022. "Limited impacts of carbon tax rebate programmes on public support for carbon pricing," Nature Climate Change, Nature, vol. 12(2), pages 141-147, February.
    4. Tarr, David G. & Kuznetsov, Dmitrii E. & Overland, Indra & Vakulchuk, Roman, 2023. "Why carbon border adjustment mechanisms will not save the planet but a climate club and subsidies for transformative green technologies may," Energy Economics, Elsevier, vol. 122(C).
    5. Wang, Jun & Qin, Yanjun & Zhou, Jingyang, 2021. "Incentive policies for prefabrication implementation of real estate enterprises: An evolutionary game theory-based analysis," Energy Policy, Elsevier, vol. 156(C).
    6. Cali,Massimiliano & Ghose,Devaki & Montfaucon,Angella Faith Lapukeni & Ruta,Michele, 2022. "Trade Policy and Exporters’ Resilience : Evidence from Indonesia," Policy Research Working Paper Series 10068, The World Bank.
    7. Ritzberger, Klaus & Weibull, Jorgen W, 1995. "Evolutionary Selection in Normal-Form Games," Econometrica, Econometric Society, vol. 63(6), pages 1371-1399, November.
    8. Donald B. Marron & Eric J. Toder, 2014. "Tax Policy Issues in Designing a Carbon Tax," American Economic Review, American Economic Association, vol. 104(5), pages 563-568, May.
    9. Uyarra, Elvira & Shapira, Philip & Harding, Alan, 2016. "Low carbon innovation and enterprise growth in the UK: Challenges of a place-blind policy mix," Technological Forecasting and Social Change, Elsevier, vol. 103(C), pages 264-272.
    10. Perdana, Sigit & Vielle, Marc, 2022. "Making the EU Carbon Border Adjustment Mechanism acceptable and climate friendly for least developed countries," Energy Policy, Elsevier, vol. 170(C).
    11. Beck, Ulrik R. & Kruse-Andersen, Peter K. & Stewart, Louis B., 2023. "Carbon leakage in a small open economy: The importance of international climate policies," Energy Economics, Elsevier, vol. 117(C).
    12. Naef, Alain, 2024. "The impossible love of fossil fuel companies for carbon taxes," Ecological Economics, Elsevier, vol. 217(C).
    13. Nong, Duy & Simshauser, Paul & Nguyen, Duong Binh, 2021. "Greenhouse gas emissions vs CO2 emissions: Comparative analysis of a global carbon tax," Applied Energy, Elsevier, vol. 298(C).
    14. Gu, Rongrong & Guo, Ji & Huang, Yuxiang & Wu, Xianhua, 2023. "Impact of the EU carbon border adjustment mechanism on economic growth and resources supply in the BASIC countries," Resources Policy, Elsevier, vol. 85(PB).
    15. Yang, Changjiang & Yan, Xiaoxuan, 2023. "Impact of carbon tariffs on price competitiveness in the era of global value chain," Applied Energy, Elsevier, vol. 336(C).
    16. Han, Seungjin, 2007. "Strongly robust equilibrium and competing-mechanism games," Journal of Economic Theory, Elsevier, vol. 137(1), pages 610-626, November.
    17. Lin, Boqiang & Zhang, Aoxiang, 2023. "Government subsidies, market competition and the TFP of new energy enterprises," Renewable Energy, Elsevier, vol. 216(C).
    18. Zhou, Kuo & Qu, Zhi & Wei, Zhixuan & Zhao, Jiyang, 2023. "Does government fiscal pressure matter for firm environmental performance? The role of environmental regulation and tax competition," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 1187-1204.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Qin Shu & Reziyan Wakasi & Yang Su, 2025. "Research on Synergistic Mechanism of Upstream Subjects of Agro-Ecological Product Supply Chain—Based on the Perspective of Three Systems Evolutionary Game," Sustainability, MDPI, vol. 17(8), pages 1-26, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Deng, Yirui & Yin, Mengjuan & Xu, Xiaofeng & Yu, Lean & Gao, Guowei & Ma, Li, 2024. "How to develop global energy-intensive sectors in the presence of carbon tariffs?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 91(C).
    2. Chu, Long & Do, Thang Nam & Le, Thi Ha Lien & Ho, Quoc Anh & Dang, Khoi, 2024. "Carbon border adjustment mechanism, carbon pricing, and within-sector shifts: A partial equilibrium approach to Vietnam's steel sector," Energy Policy, Elsevier, vol. 193(C).
    3. Jingzhi Zhu & Yuhuan Zhao & Lu Zheng, 2024. "The Impact of the EU Carbon Border Adjustment Mechanism on China’s Exports to the EU," Energies, MDPI, vol. 17(2), pages 1-18, January.
    4. Lu, Tinghui & Li, Xuelian & Lin, Jyh-Horng & Chang, Ching-Hui & Cai, Zhantong, 2024. "Assessing the impact of climate policies on equity risk under sustainable insurance: Cap-and-trade regulation, energy-saving technology subsidies, and carbon tariffs," Energy Economics, Elsevier, vol. 139(C).
    5. Lin Yang & Zhengnan Lu & Mengsha Shen, 2025. "Research on the Effect and Path of CBAM on Green Technology Innovation in China’s High-Carbon Manufacturing Industries," Sustainability, MDPI, vol. 17(5), pages 1-26, March.
    6. Lin, Boqiang & Zhao, Hengsong, 2024. "Threatening the Poor? The economic impacts of carbon border adjustment mechanism on developing countries," Structural Change and Economic Dynamics, Elsevier, vol. 71(C), pages 582-593.
    7. Wang, Junbo & Ma, Zhenyu & Fan, Xiayang, 2023. "We are all in the same boat: The welfare and carbon abatement effects of the EU carbon border adjustment mechanism," MPRA Paper 118978, University Library of Munich, Germany.
    8. Mei Lu & Michael G Pollitt, 2025. "Will high carbon prices reduce fossil fuel use in China? Evidence from price elasticity estimates using firm data," Working Papers EPRG2508, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    9. Yangyang Li & Jianing Sun & Juan Chen & Jinlei Li & Li Sun & Kewang Cao, 2024. "How to Promote the Development of Cultural and Creative Industries from an Evolutionary Game Perspective: Policy Mechanisms for Certification + Incentives," Sustainability, MDPI, vol. 16(11), pages 1-38, May.
    10. Andy L. Siy & Anzhou Wang & Tingting Zheng & Xian Hu, 2023. "Research on the Impact of the EU’s Carbon Border Adjustment Mechanism: Based on the GTAP Model," Sustainability, MDPI, vol. 15(6), pages 1-15, March.
    11. Wissal Morchid & Eduardo A. Haddad & Luc Savard, 2024. "Measuring the Cost of the European Union’s Carbon Border Adjustment Mechanism on Moroccan Exports," Sustainability, MDPI, vol. 16(12), pages 1-19, June.
    12. Tian Lan & Ran Tao, 2024. "Research on the Inhibitory Effect of the EU’s Carbon Border Adjustment Mechanism on Carbon Leakage," Sustainability, MDPI, vol. 16(17), pages 1-21, August.
    13. Kölle, Felix & Kübler, Dorothea & Ockenfels, Axel, 2024. "Impartial policymakers prefer to impose carbon pricing to capping, especially when combined with offsets," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 226, pages 1-7.
    14. Wang, Kai-Hua & Wang, Zu-Shan & Yunis, Manal & Kchouri, Bilal, 2023. "Spillovers and connectedness among climate policy uncertainty, energy, green bond and carbon markets: A global perspective," Energy Economics, Elsevier, vol. 128(C).
    15. Lijun Ren & Jingru Wang & Luoyi Zhang & Xiaoxiao Hu & Yan Ning & Jianhui Cong & Yongling Li & Weiqiang Zhang & Tian Xu & Xiaoning Shi, 2025. "Quantitative Assessment of the Carbon Border Adjustment Mechanism: Impacts on China–EU Trade and Provincial-Level Vulnerabilities," Sustainability, MDPI, vol. 17(4), pages 1-19, February.
    16. Li, Wei & Liu, Xing & Lu, Can, 2023. "Analysis of China's steel response ways to EU CBAM policy based on embodied carbon intensity prediction," Energy, Elsevier, vol. 282(C).
    17. Li, Xuelian & Zhou, Wei & Lo, Tang-Yun & Lin, Jyh-Horng, 2024. "International climate policy dilemmas: Examining effective carbon tariff and cap-and-trade regulation from a sustainable insurance perspective," Energy Economics, Elsevier, vol. 134(C).
    18. Lin, Boqiang & Zhao, Hengsong, 2023. "Evaluating current effects of upcoming EU Carbon Border Adjustment Mechanism: Evidence from China's futures market," Energy Policy, Elsevier, vol. 177(C).
    19. Chen, Shi & Zhao, Yonghong & Huang, Fu-Wei & Wang, Bin & Lin, Jyh-Horng, 2024. "Carbon leakage perspective: Unveiling policy dilemmas in emission trading and carbon tariffs under insurer green finance," Energy Economics, Elsevier, vol. 130(C).
    20. Jiayi Liu & Weidong Wang & Tengfei Jiang & Huirong Ben & Jie Dai, 2025. "Carbon Border Adjustment Mechanism as a Catalyst for Greenfield Investment: Evidence from Chinese Listed Firms Using a Difference-in-Differences Model," Sustainability, MDPI, vol. 17(8), pages 1-21, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:16:y:2024:i:8:p:3113-:d:1372386. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.