Proceedings of the 2026 4th International Conference on Digital Economy and Management Science (CDEMS 2026)

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Doing Nothing? Carbon Abatement Decisions of Pure Monopoly Airlines under a Dynamic Aviation Carbon Tax

Authors
Lei Xu1, Longfei Dong2, Junwei Zhang2, *
1School of Management and Economics, Civil Aviation University of China, Tianjin, 300300, China
2School of Transportation Science and Engineering, Civil Aviation University of China, Tianjin, 300300, China
*Corresponding author. Email: jwzhangts@163.com
Corresponding Author
Junwei Zhang
Available Online 2 June 2026.
DOI
10.2991/978-94-6239-699-9_16How to use a DOI?
Keywords
Carbon Abatement Technology Investment; Aviation Carbon Tax; Carbon Allowances; Monopoly Airline
Abstract

The aviation carbon tax is a critical policy instrument for emission reductions, yet its impact on airline operations remains under explored. This study investigates the optimal capacity and abatement investment decisions of a monopolistic airline under a dynamic aviation carbon tax. By constructing and solving three models—no tax, tax without abatement, and tax with abatement—we derive equilibrium solutions revealing key insights. When initial carbon allowances are sufficient, the tax policy becomes ineffective. When allowances are scarce, the airline’s abatement level and cost become critical determinants of its optimal strategy. Interestingly, a larger market size or lower abatement cost may paradoxically reduce the airline’s tolerance for the carbon tax. Moreover, under sufficiently high tax rates, even environmentally conscious green airlines may find it optimal to abandon abatement investments altogether. This research provides theoretical contributions and practical insights for airlines in countries with low carbon regulations as they navigate increasingly stringent aviation carbon tax policies.

Copyright
© 2026 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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Volume Title
Proceedings of the 2026 4th International Conference on Digital Economy and Management Science (CDEMS 2026)
Series
Advances in Economics, Business and Management Research
Publication Date
2 June 2026
ISBN
978-94-6239-699-9
ISSN
2352-5428
DOI
10.2991/978-94-6239-699-9_16How to use a DOI?
Copyright
© 2026 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Cite this article

risenwbib
TY  - CONF
AU  - Lei Xu
AU  - Longfei Dong
AU  - Junwei Zhang
PY  - 2026
DA  - 2026/06/02
TI  - Doing Nothing? Carbon Abatement Decisions of Pure Monopoly Airlines under a Dynamic Aviation Carbon Tax
BT  - Proceedings of the 2026 4th International Conference on Digital Economy and Management Science (CDEMS 2026)
PB  - Atlantis Press
SP  - 135
EP  - 144
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6239-699-9_16
DO  - 10.2991/978-94-6239-699-9_16
ID  - Xu2026
ER  -