Analysis on energy taxation based on Cournot model

In Chinaʹs energy cost calculation, environment compensation and energy utilization rate are neglected, which causes problems of high energy consumption, high pollution and low efficiency. By establishing multi-oligarchs Cournot model for energy enterprises, the paper figure out reaction function and equilibrium price when Nash is in equilibrium. On this basis, taxation factor and energy consumption incentive factor are introduced, and the changes in price, output, and profit are re-analyzed when Nash is in equilibrium. Finally, the paper comes out that a moderate taxation can compensate environment negative externality and raise energy price to its real price. In the meantime, by increasing incentive strategy, enterprise can reduce energy consumption and advance the development of energy sustainable utilization technology.