Research of the Behavior of Low-Carbon Economy Subjects Based on Incentive Compatibility Theory

Abstract

The development of low carbon economy is closely related to the interests of all sectors of society, especially the main three to participate: the government, enterprises and the public. In this process, how to coordinate the interests of all parties and formulate a reasonable incentive mechanism has become an important task for the government. Studied on the analysis of the behavior status and goals of the government, enterprises and public on the background of low carbon economic development, then used the game method to quantify each object' interests of the target and relations. At last, designed incentive mechanism on the basis of incentive compatibility principle to meet the individual subject welfare maximization and, the greatest degree of protection for the development of low carbon economy.

Incentive-compatible mechanism for manufacturing carbon emission supervision under carbon control policies in China

“…When the incentive mechanism with pure penalty is improved to an incentive mechanism with positive subsidy and negative penalty, the supervision of supervisory departments over manufacturing enterprises is changed from an incompatible state to a constrained compatible state. It further highlights the importance of subsidies in incentive-compatible mechanism, which has been demonstrated in the studies of Sun and Chang [7] and Sheng et al [57]. What needs to be particularly emphasized is that the simulation results fully illustrate the positive effect of peer funds on the compatibility of MCE supervision, which not only expands the funding channels for government subsidies from a practical perspective, but also argues the feasibility of the organizational internal incentive scheme suggested by Yang et al [68] from a theoretical perspective.…”

“…Accordingly, scholars used the evolutionary game to explore the main reasons of incentive-incompatible among economic subjects and form the institutional arrangement of incentive-compatible mechanism. For instance, Sun et al [ 7 ] analyzed the behavioral motives and profit demands of governments, enterprises and public in the context of low-carbon economic development and found the breakthrough point for formulating relevant incentive-compatible policies. To explore incentive-compatible payment mechanisms for watershed services, Sheng and Webber [ 57 ] and Jiang et al [ 8 ] validated the effect of the supervisor’s penalty and compensation intensity on incentive-compatible schemes through a tripartite evolutionary game model.…”

“…The main reason is that in the supervision process of carbon emission in China, there is a high degree of information asymmetry between supervisory department and manufacturing enterprise, which inevitably generates a conflict of objectives. According to the practical application of incentive regulation theory [ 7 , 8 ], the key to eliminate the information asymmetry problem in supervision is to achieve incentive compatibility between the supervisor and supervised, and to moderate potential profit conflicts. To our knowledge, the Chinese government mainly adopts a penalty-based incentive mechanism in MCE supervision, and incentive mechanisms such as green subsidies and carbon offsets are relatively narrow in coverage.…”

Analysis on Evolutionary Stability Strategies of Carbon Emission of Logistics Enterprises Based on Carbon Tax

“…erefore, scholars at home and abroad generally used the evolutionary game model to study the relationship between the government, enterprises, and consumers in carbon emission and found the optimal solution or stability strategy selected by the three according to their own interests and needs, such as Xu and Lv [30] incorporated the public, enterprises, and government, the main bodies of low-carbon economic construction, into the game model analysis system to find the evolution path and stability strategy of different subjects. Sun and Chang [31], based on incentive compatibility theory and game theory, studied and obtained the key points of the government in formulating incentive policies for enterprises and consumers. Tian et al [32] used evolutionary game theory to analyze the relationship among stakeholders such as government, enterprises, and consumers and built a system dynamics (SD) model to guide subsidy policies.…”