Evaluating the effectiveness of carbon tax and emissions trading for resolving social dilemma on global environment

In this paper we formulate a dynamic model of a profit maximization problem for evaluating quantitatively how the policy of carbon tax and emissions trading would be effective to achieve the targeted reduction of the Kyoto Protocol. Furthermore, we evaluate the influence of carbon tax and emissions trading on the economy in industry in a long-term view. Keywords-global warming, carbon tax, emissions trading, dynamic model, Kyoto Protocol, economic impact