Abstract: Eco-innovation is an effective carrier and basic way to realize energy saving and emission reduction.In the end of 2017, China started the national carbon trading system. In this context,it is a very important theoretical and practical significance to study the optimization of enterprise eco-innovation decision. Eco-innovation is divided into the ecological process innovation and the end-of-pipe treatment. By building a three-stage game model of cooperation and competition strategy within carbon trading system, the inverse method is used to obtain the equilibrium solution of each stage, then the level of ecological process innovation, end-of-pipe treatment, the optimal carbon emission standard and social welfare are compared. Results show that:the cooperation strategy is better than the competition strategy. Based on the data of electric power industry in Hubei Province,the simulation further finds that the reduction of carbon emission standard will reduce the level of ecological process innovation, increase end-of-pipe treatment. There is a negative correlation between R&D cost coefficient and the level of ecological process innovation. In addition, the socially optimal technology spillover coefficient is 0.8. The article provides several implications for both policy makers and enterprise managers.

Key words: carbon trading system, ecological process innovation, end-of-pipe treatment, research strategy, game model