My understanding of carbon markets is that they function very similar to normal stock markets. The price of carbon credits can fluctuate depending on demand and supply of these credits. A good example of they work would be from curbside bin collection. The waste is carbon emissions and the bins are carbon credits/ the amount of waste someone is aloud to produce. If you exceed your limit you can pay a neighbour who has space in their bin to put some of your waste in. This essential encourages businesses to act sustainably as not only does it mean you want have to pay for extra credits but you can also make money from being waste efficient.