Optimal Introduction Timing Model of Enterprise Carbon Emission Reduction Technology Under Viscosity Solution Framework

Abstract:

By use of the theory of real options and under the uncertainty of carbon emission rate and technology cost, the optimal introduction timing of carbon emission reduction technology for enterprises was explored, with the consideration of the cost of technology maintenance. And the optimization problem was transformed into a variational inequality problem for solving the HJB (Hamilton-Jacobi-Bellman)equation. Under the framework of viscosity solution, it was proved that the value function was the unique viscosity solution of the problem. The numerical simulation results were presented, and the optimal introduction timing with different parameters was also discussed.

Key words:carbon reduction;the optimal introduction timing;Hamilton-Jacobi-Bellman equation;viscosity solution