This study examines the joint optimization decisions on production quantity and sustainable investment of two competing low-carbon manufacturers with loss aversion and reference dependence under the cap-and-trade policy. We focus on exploring the impacts of manufacturers’ risk attitude, encompassing factors like the degree of loss aversion and reference dependence, the cap-and-trade policy, and heterogeneous characteristics on optimal decisions and their expected utilities. The main findings are as follows. First, loss aversion and reference dependence have completely opposite effects on manufacturers’ production and emission reduction decisions. Specifically, production quantity will become more conservative. Interestingly, the investment to reduce emissions may actually become more aggressive. In addition, setting a lower reference level presents an opportunity for firms to generate greater profits compared to the risk-neutral scenario. Second, affected by loss aversion and reference dependence, manufacturers’ sustainable investment may decrease with carbon trading price, which is different from the conclusion of the existing research. Third, the total expected utility of heterogeneous manufacturers decreases with the difference of loss aversion and reference dependence. Finally, we extend our analysis to the impacts of sustainable investment, initial carbon emissions associated with emission reduction and heterogeneous market prices. This paper enriches the research on carbon emission reduction and loss aversion with reference dependence, and provides some managerial insights for practice from the perspective of government and enterprise operation.

中文翻译：

---

总量控制与交易政策下具有参考依赖性的厌恶亏损竞争制造商的可持续生产战略


本研究考察了在总量控制与交易政策下，两家具有亏损厌恶和参考依赖的竞争性低碳制造商在产量和可持续投资方面的联合优化决策。我们专注于探索制造商风险态度的影响，包括损失厌恶程度和参考依赖性、限额与交易政策以及异质性特征对最佳决策及其预期效用的影响。主要发现如下。首先，损失厌恶和参考依赖对制造商的生产和减排决策具有完全相反的影响。具体来说，生产数量将变得更加保守。有趣的是，减少排放的投资实际上可能会变得更加激进。此外，与风险中性情景相比，设定较低的参考水平为企业提供了产生更大利润的机会。（2）受损失厌恶和参考依赖的影响，制造商的可持续投资可能随着碳交易价格的降低而降低，这与现有研究的结论不同。（3）异构制造商的总预期效用随着损失厌恶和参考依赖性的差异而降低。最后，我们将分析扩展到可持续投资的影响、与减排相关的初始碳排放量以及异质市场价格。本文丰富了基于参照依赖的碳减排与损耗规避研究，并从政企运行的角度为实践提供了一些管理启示。