Carbon tariff: A TBT game based on expected benefit

This paper first introduces the background and the reason of carbon tariff, and then probes its rationality and its nature as a TBT. It holds the view that carbon tariff is a TBT game between developed countries and developing ones based on expected benefit. In the short term, developed countries tend to impose carbon tariff as long as expected benefit from low-carbon environment is high enough to offset the trade retaliation measures from developing countries; in medium term, technology and equipment transfer is most probably the equilibrium, with both carbon tariff and trade retaliation measures abandoned; while in the long run, developed countries are motivated to upgrade carbon emission standard as an trade barriers. Whether or not developed countries will take the action depends on the expected loss from developing countries´ technology upgrade and expected retaliation.