A Differential Game Study in the Global Carbon Reduction Actions

Under the background of global response to climate change, we divide the countries participating in carbon reduction into developed country group and developing country group. This paper uses differential game model to study the optimal emission reduction strategies, optimal carbon level trajectories, and optimal benefits of two country groups under different game modes., i.e., non-sharing mode N, complete cooperation mode C, and common but differentiated mode S. The results show that Mode C can achieve the maximum emission reduction intensity, the lowest carbon level, and the maximum overall benefit. Under the premise that the discount rate is greater than the natural growth rate of carbon levels, the developing country group achieves Pareto improvement in Model S compared to Model N in terms of emission reduction intensity and optimal benefit as well as the lower optimal carbon level when it is less sensitive to the changes in international reputation brought by carbon reduction – it plays the role of “free rider”. Finally, numerical examples verify the above theoretical results.