JIUH-BIING SHEULi F.2020-03-062020-03-062014https://scholars.lib.ntu.edu.tw/handle/123456789/472083In response to the growing need to reduce greenhouse gas (GHG) emissions worldwide, the emission trading scheme (ETS) has become one of the most efficient instruments to reduce GHG emissions. For example, the European Union (EU) now charges a carbon emission fee to airlines flying into or out of EU airports. This work investigates the effect of carbon permits (CPs) under the cap-and-trade scheme on competition and green transportation strategies of global airlines using a behavioral economics approach. One feature of the proposed model is that passenger attitudes toward green transportation service with perceived uncertainties are conceptualized into airline response functions to characterize how airlines respond to the CP instrument via pricing and investments in green transportation. Qualitative analyses and a numerical study of the ETS-CP instrument provide important managerial insights into airline repricing and green transportation investment strategies. Most importantly, this work generates a relationship between the green transportation and consumer behavior fields via behavioral economics theory. © 2014 INFORMS.Behavioral economics; Consumer behavior; Emission trading scheme; Green transportation[SDGs]SDG12Air transportation; Carbon; Civil aviation; Commerce; Competition; Consumer behavior; Economics; Emission control; Gas emissions; International law; Investments; Behavioral economics; Duopoly markets; Effect of carbons; Emission trading scheme; Green transportations; Market competition; Qualitative analysis; Response functions; Greenhouse gasesjournal article10.1287/trsc.2013.0473https://www2.scopus.com/inward/record.uri?eid=2-s2.0-84918830305&doi=10.1287%2ftrsc.2013.0473&partnerID=40&md5=d46e57d722fa221e3ada863db0bfb908