How to Restrain Regulatory Capture and Promote Green Innovation in China. An Analysis Based on Evolutionary Game Theory

Abstract

In response to severe environmental challenges, green innovation (GI) has been thoroughly considered by various governments. Although China has promulgated many environmental policies to promote environmental governance, regulatory capture and the lack of independent external supervisors lead to a challenging future. This study employs an evolutionary game method to explore how the policy burden and media affect decision-making between local governments and manufacturing enterprises. On this basis, the simulation method is used to examine critical factors that affect regulatory capture and GI. The results show that the policy burden is the main factor that causes regulatory capture. When the policy burden exceeds a certain threshold, it will cause regulatory capture and hinder GI. Moreover, media, as an external supervisor, can restrain regulatory capture and promote GI significantly. Specifically, when the capacity of media supervision is high enough, due to the positive role of the media, it will inhibit the negative effects of policy burdens. Finally, combined with the different development stages of China’s green industry, the corresponding policy recommendations are given. These results extend the research of regulatory capture and provide a reference for governments to promote environmental governance in practice.

An evolutionary game study on the collaborative governance of environmental pollution: from the perspective of regulatory capture

“…In terms of the causes of regulatory capture, Yuan concluded that policy burden is the main factor leading to regulatory capture. When the policy burden exceeds a certain threshold, it results in regulatory capture and hinders green innovation (10). In terms of the consequences of regulatory capture, Xu et al concluded that regulatory capture negatively regulates the promoting effect of environmental regulation on R&D and innovation (41).…”

“…In terms of the environmental behavior of enterprises, few scholars quantitatively study the effect of the combination of incentive-based and constraint policies. In addition, the environmental behavior of local governments mainly involves economic preferences (8), reward and punishment mechanisms (88), policy burdens (10), and environmental protection tax policies (6,42), and few scholars have considered both the economic and environmental preferences of local governments. (2) In terms of the relevant subjects involved in environmental pollution governance, existing studies mainly include the central government (67), local governments (84), polluting enterprises (85), third-party environmental protection organizations (87), the public (86), and the media (79), and few scholars include enterprises, local governments, the central government, and the media in the same model to study environmental pollution governance.…”

“…Therefore, when local governments consider responses such as damaged economic development and a sharp drop in tax revenue that occur in the process of environmental law enforcement, they are forced to focus on economic development. It is possible to "turn a blind eye" or impose only minor penalties on the pollution violations of enterprises, which would result in the phenomenon of lax law enforcement or of law enforcement that only goes through the motions (10). For example, in 2018, a carbon 9 leak accident occurred in Quanzhou, Fujian, China.…”

Research on the evolutionary game of multi-agent collaborative supervision of enterprise green behavior driven by big data

“…In terms of the participants in environmental governance, Bian et al (2022) explored the regulatory effect of the combination of formal and informal environmental regulation with public participation under heterogeneous government regulations, which can further promote green behavior by enterprises. Yuan (2021) analyzes the influence of the policy burden and the media on decision-making between local governments and manufacturing enterprises, and demonstrated that the supervisory role of the media can inhibit the regulatory capture caused by the policy burden to a certain extent, so as to promote the green technology innovation by enterprises. Chu et al (2022) established a tripartite evolutionary game model involving the local government, polluting enterprises and the public, and suggested that public supervision could help reduce the regulatory burden on local government and that the public could cooperate with relevant government policies to improve the effectiveness of environmental supervision.…”

Regional Happiness and Corporate Green Innovation: A Financing Constraints Perspective

“…According to this view, environmental regulation essentially impacts the private costs of enterprises, is not conducive to the improvement of enterprises' independent innovation ability and has a restraining effect on economic growth and environmental efficiency. Kneller and Manderson [71] and Yuan [72] found that environmental regulation has an inhibiting effect on enterprises' technological innovation. In addition to environmental regulations, external environment can also affect the green innovation of enterprises through public anger and condemnation, for example, in response to nearby environmental spills, firms may increase both environmental innovation input and output [73].…”