Environmental Engineering Research

Korean Society of Environmental Engineers (대한환경공학회)
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Analysis of the Supervision of Ecological Subsidies: Based on the Principal-agent Model

  • Zhang, Yuesheng (School of Finance and Economics, Xi'an Jiaotong University)
  • Received : 2014.09.05
  • Accepted : 2014.12.04
  • Published : 2014.12.31
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Abstract

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.

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References

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