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The supplier's abatement cost subsidy of MSIII with paid quota mechanism is [DELTA][k.sup.*.sub.s3] = [lambda][z.sub.0][bk.sub.s][k.sub.m]/(3[k.sub.m] - [bz.sup.2.sub.m])[[??].sub.3].
For [lambda][e.sub.m][[??].sub.3][[bar.p].sub.em3] [greater than or equal to] [DELTA][k.sup.*.sub.m3] we get the optimal auction reserve price of manufacturer in MSIII:
Similarly, in the context of MSIII, we can get the optimal increase in carbon price with tariff [lambda]:
And optimal carbon intensity in MSIII policy is 3.40%, 0.4 percent higher than the current carbon policy intensity.
For realized reduction rate, reduction rate in MSIII is the highest 3.40%, 0.85 percent higher than MSI and MSII.
The auction reserve price in MSIII supplier is the lowest 77.5 yuan/ton, 30 yuan lower than the MSI and MSII.
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