›› 2017, Vol. 29 ›› Issue (5): 226-236.

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Evolutionary Game Analysis of Governments and Polluting Firms Considering Environmental Tax Regulation

Chen Zhenling1, Wang Wenju2   

  1. 1. College of Economics/Henan Collaborative Innovation Center for Coordinating Industrialization, Urbanization and Agriculture Modernization in Central Economic Zone, Henan University of Economics and Law, Zhengzhou 450046;
    2. Beijing Wuzi University, Beijing 101149
  • Received:2015-11-01 Online:2017-05-28 Published:2017-05-26

Abstract:

Based on the game theory, this paper constructs two revenue functions of micro subject models:the principal-agent model relating to the central government and local governments, and the evolutionary game model relating to the government and pollution enterprises. We also analyze and simulate their intrinsic interest relations in the relation among the central &local governments and the enterprises. The reason findings show that:Firstly, the evolutionary stable strategy between the governments and polluting firms can achieve the Pareto optimality in the condition of environmental tax when the subsidy is greater than the cost. Secondly, it is significant to increase the share ration of tax revenue between the central and local governments which can improve the local government's supervision of pollution firms. Thirdly, when we strengthen environmental regulation and increase environmental tax, pollution emission will decrease. However, once environmental regulation is relaxing, polluting firms will not adopt pollution abatement strictly though we increase environmental tax. polluting firms will have two choices:Some firms are unwilling to reduce pollution, others will choose the strategy of pollution reduction. So, it is important to stipulate the reasonable mechanism of environmental tax which can promote actively pollution abatement of firms, and economic green development.

Key words: environmental tax, the principal-agent model, the evolutionary game