Abstract: Under the Cap-and-Trading scheme, aiming at carbon emission reduction for two competitive supply chains with different original carbon emission, a Stackelberg model is constituted based on dynamic game theory. The backward induction analysis method is applied to get the pricing and carbon emission reduction strategies. Due to the complexity in their form, the 3-dimensional numerical simulation technique is used to simulate the impact of key parameters to system performance indexes. Quantitative relations among carbon emission, pricing strategies and key parameters are finally obtained. Results show that much high emission reduction investment can not benefit their carbon emission, but product differentiation can play its role, and improvement in low carbon technology investment and environmental consciousness meanwhile will tend to maximize consumer surplus.