Optimal control strategy of companies: inheriting period and carbon emission reduction (Q2214786)

Summary: In this paper, we develop an optimal control model of companies for the inheriting period, during which interphase banking and borrowing of allowances are allowable. By considering the emission reduction policy and the initial auction amount, we optimize the problem in two steps. The model is then converted into a two-dimensional Hamilton-Jacobi-Bellman equation. The numerical results, analysis, and comparisons are presented. Finally, we highlight several policy implications from the perspectives of companies and governments.