Internalization of Negative External Cost of Logistics and Incentive Mechanism

Abstract

Abstract:The implementation of green logistics can reduce the increasingly serious environmental damage and improve the operating efficiency of logistics enterprises. In this paper, through quantitative calculation of logistics negative external costs, including traffic accidents, atmospheric pollution, noise pollution, and pollution caused by packaging, we build accounting standards to calculate the negative external cost of logistics enterprises that mainly generate pollution from transportation and packaging. Then, assuming the impetus provided by government implementing incentive mechanisms in a free market economy, we establish a 'Logistics Negative External Cost Internalizing' model, which quantitatively analyzes the relationships among freight rate, freight volume, investment of enterprise for implementing green logistics, and the subsidy given by government, under the comparison of the two modes 'enterprise operates first' and 'government subsidizes first'. The results show that the introduction of 'government subsidizes first' incentive mechanism and increasing freight rate are helpful in promoting the process of logistics market greening.