Publisher : Korean Society of Environmental Engineering
DOI : 10.4491/eer.2014.058
Title & Authors
Analysis of the Supervision of Ecological Subsidies: Based on the Principal-agent Model Zhang, Yuesheng;
In view of the problem of the invalidity of the incentive mechanism of the ecological subsidies, which is due to the information asymmetry between the government's supervision and the enterprise endeavor to fulfill their ecological responsibilities, this paper attempts to analyze the supervision of ecological subsidies based on the Principal-agent Model. Two conclusions are drawn: firstly, the government's supervision regarding the effect of the enterprises' fulfilling the ecological responsibilities can significantly reduce the information asymmetry; secondly, the government's incentive strength and the enterprises' endeavor level of fulfilling the ecological responsibilities are both improving the surveillance dynamics. Here is the suggestion: with the increasing of the surveillance dynamics of the government and the transparency of the enterprises' fulfilling the ecological responsibilities, the government should meanwhile increase the subsidies incentive strength, therefore, to promote the effort level of the enterprises' fulfilling the ecological responsibilities to approach to the Pareto optimal value.
Kagan RA, Gunningham N, Thornton D. Explaining corporate environmental performance: how does regulation matter? Law Soc. Rev. 2003;37:51-90.
Doonan J, Lanoie P, Laplante B. Determinants of environmental performance in the Canadian pulp and paper industry: an assessment from inside the industry. Ecol. Econ. 2005;55:73-84.
Delmas MA, Toffel MW. Organizational responses to environmental demands: opening the black box. Strategic Manage. J. 2008;29:1027-1055.
Mirrless J. Notes on welfare economies, information and uncertainty. In: Michael Balch, Daniel McFadden and Shif-yen Wu, eds. Essays on economic behavior under uncertainty. Amsterdam: North-Holland; 1974.
Mirrless JA. The optimal structure of authority and incentives within an organization. Bell J. Econ. 1976;7:105-131.
Holmstrom B. Moral hazard in teams. Bell J. Econ. 1982;13:324-340.
Theilen B. Simultaneous moral hazard and adverse selection with risk agents. Econ. Lett. 2003;79:283-289.