Nonlinear Complex Dynamics of Carbon Emission Reduction Cournot Game with Bounded Rationality

Abstract

Based on the hypothesis of participant's bounded rationality, our study formulated a novel Cournot duopoly game model of carbon emission reduction and, subsequently, analyzed the dynamic adjustment mechanism of emission reduction for enterprises. The existence and stability of the equilibrium solution of game are further discussed by the nonlinear dynamics theory. Our findings revealed that the parameters have key significance on the dynamic properties of the system. However, when the adjustment speed gets too large, the system loses the original stability and vividly demonstrates complex chaos phenomenon. Higher market prices in carbon trading have an outstanding impact on the stability of the system, which easily leads to system instability. Our study further controlled the chaos behavior of the power system by the delay feedback control. The results of the numerical analysis depict that the unstable behavior of the dynamic system can be controlled efficiently and quickly, in the quest to restore back a stable and orderly market. Our novel method is proved to have provided decision makers with effective solution to market instability.