Evaluation of Water Treatment Technologies in Water-Intensive Industries Under Cap-and-Trade Strategy: A Game-Theoretic Approach

Water-intensive industries such as steel production, with a significant carbon footprint in both production stages and water treatment processes, play a major role in environmental pollution. This issue has prompted governments to develop policies and mechanisms aimed at reducing carbon emissions in these industries. One such policy is carbon trading—a mechanism in which each company is allocated a specific carbon emission quota. Companies that exceed this quota face penalties, while those with lower emissions can sell their surplus quotas to others. This study employs a Stackelberg game model, where the government acts as the leader and producers as the followers. Using game theory, the effects of government subsidies on the equilibrium values of decision variables, including production levels, carbon emissions, and costs, are analyzed. The results of this analysis provide valuable insights for governments and producers in formulating effective policies to reduce the carbon footprint and improve the environmental performance of industries. By offering practical insights into economic and environmental interactions, this research plays a crucial role in understanding the impact of governmental policies on decision-making in water-intensive industries.