Abstract:This paper establishes the government subsidies decision model of public transportation considering carbon trading. Based on the practical situation, four government subsidies scenarios are discussed considering different kinds of carbon trading, decision models are established and the optimal parameters of the mechanism are discussed accordingly. The results show that it is of effective incentive for the public transport enterprise to enhance its quality of service by capital subsidies combining voluntary carbon transaction mode, but it has higher subsidy government cost. Only carbon quota subsidies will reach a superior social utility and lower subsidy cost though, it has a poor performance in stimulating enterprises. The results of this paper suggest a mixed policy combining carbon quota subsidies with a voluntary carbon transaction as the first choice for government subsidies decision to promote the effort level of public transport enterprise and maximize the social total welfare together.
