The impact of the heterogeneity of market participants on China's green certificate trading: A collective action perspective

Renewable portfolio standards (RPS) and tradable green certificate (TGC) systems are mandatory institutional change that promote the renewable energy development and improve the environment in China. Their implementation will cause collective action issues among market entities. Collective action of participating in TGC trading is crucial for transaction success and the effectiveness of system implementation. This paper takes the collective action of heterogeneous market entities participating in TGC trading as the starting point. This paper simulates the strategy selection and group behavior evolution of different market entities under multiple scenarios, and analyzes collective action's evolutionary path and equilibrium results under different group combination environments. It explores the success rate of TGC trading under different heterogeneous entities combinations through an evolutionary game model, revealing the reasons for low liquidity of China's TGC market. The results show that: (1) Heterogeneity is an important factor affecting the success of TGC collective action. (2) When TGC suppliers and demanders are egoists, collective actions appear in multiple equilibria. As egoists decrease, the probability of market entities participating in collective actions increases, and TGC transactions are more successful. (3) Altruists can shorten the time for collective action to achieve equilibrium and reduce the possibility of multiple equilibria. (4) TGC suppliers play a greater guiding role in the transaction. When TGC suppliers are altruists, the probability of TGC demanders participating in collective action tends to 1. Conversely, TGC transaction success rate is 50%.