Academy of Interdisciplinary Studies Division of Environment and Sustainability 203 Game-theoretic Analysis of Markets Supervisor: CHAN, Keith / ENVR Student: GONG, Theodore Pak Yin / ECOF Course: UROP1100, Fall UROP2100, Spring Green Taxonomy is a relatively new concept and there were heated discussions around the globe on the issue of Green Taxonomy design. The regulatory environment of taxonomy, other than just being a classification tool to distinguish green economic activities versus the brown ones, also serves as a basis for different kinds of environmental regulations. In June 2022, the European Commission (EC) announced the inclusion of natural Gas and nuclear as (transitional) ‘green’ energy sources. Intensive lobbying was observed. This paper uses this environment as a foundation to investigate the effect of carbon price on the lobbying outcome of these kinds of ‘green threshold adjustments’. We develop a game-theoretic model to show how the probability of such adjustments being made is affected by the current carbon price level changes through firms’ lobbying contest. We then moved on to strategic interactions between natural gas firms and renewable energy investors to see how their interactions would affect the lobbying directions and intensities in this setting. Game-theoretic Analysis of Markets Supervisor: CHAN, Keith / ENVR Student: LAU, Chi Choi / EVMT Course: UROP1100, Fall UROP2100, Spring There is an urgent need to direct capital towards climate change mitigation in emerging markets. To enable this, developed countries can endorse the common ground of their taxonomies and those in emerging markets while potentially creating policies and investment incentives to guide global capital in that direction. However, little is understood about the impact which taxonomy misalignment may have on the effectiveness of endorsing the taxonomies of emerging markets. In response, we analyse how misalignment can occur between taxonomies, and construct a microeconomic model to show that four ratios (green bond price ratio, supply elasticity ratio, taxonomy misalignment ratio and preferential treatment ratio) should be considered to ensure the policy is not counter-productive to climate change mitigation. Game-theoretic Analysis of Markets Supervisor: CHAN, Keith / ENVR Student: YAN, Hiu Tung / QFIN Course: UROP1000, Summer Weitzman developed a marginal cost-marginal benefit model for selecting planning instruments under uncertainty. After the publishment of his seminal paper in 1974, many studies further elaborated on his result and extended the application to more general cases. This article first summarizes the extensions to Weitzman’s original framework. While there are some similar models for choosing between price and quantity instruments, for the context of pollution control in particular, this article compares their way of approaching the planning problem. Lastly, this article also includes a discussion on implementing a mixed regulatory strategy for optimal rewards and suggests some possible further research directions.
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