Decision models of emission reduction considering CSR under reward-penalty policy

Abstract

For the two emission reduction technologies of clean process (CT Mode) and end-of-pipe pollution control technology (ET Mode), this paper constructs production and low-carbon R&D decision-making models considering consumers’ green preference, and discusses the impact of social responsibility on firm’s decision-making, profit and social welfare. Then, the difference of optimal decision, profit and social welfare is analyzed when the firm adopt two emission reduction technologies with or without reward-penalty policy. The main conclusions of this paper are as follows: (1) Whether using clean process technology or end-of-pipe pollution control technology, consumers’ green preference behavior can increase corporate profit. When consumers’ green preference is small, consumers’ green preference is negatively correlated with social welfare. When consumers’ green preference is large, consumers’ green preference is positively correlated with social welfare. (2) Corporate social responsibility is conducive to improving the level of social welfare, not conducive to the increase of corporate profits. (3) When the reward and punishment intensity is small, the reward-penalty policy cannot effectively motivate the firm to assume social responsibility. Only when the reward and punishment reaches a certain level, the mechanism can have an incentive effect on the firm, and the government can actively implement the mechanism. (4) When the market scale is small, the adoption of end-of-pipe pollution control technology is more beneficial to the firm; When the market scale is large, it is beneficial for the firm to adopt clean technology. (5) If the efficiency of end-of-pipe pollution control and emission reduction is much higher than that of clean process, the firm should choose end-of-pipe pollution control technology, otherwise choose clean process.