Economic Analysis For Environmental Pollution On The Basis Of Asymmetric Information

With China's sustained and rapid economic growth, environmental problems have become increasingly prominent and thus gain widespread attention. Protecting and improving the environment and achieving sustainable economic development have become China's basic national policy. Nevertheless, the current policy focus is on how we can increase the input of funds for environmental governance to achieve the goal of improving environmental quality, rather than concerning about the low efficiency in current environmental policy or the institutional problems in intergovernmental policy implementation. However, these two aspects of the problems are restricting China's environmental improvement. The goal of this paper is to explore the root cause of these issues and put forward the practical and effective solutions with the methodologies of Economics and Gamble Theory. The innovations are as follows:(1)The paper qualitatively and quantitatively compares environmental pollution control policy tools, including fees and subsidies and tradable pollution permits, from the perspectives of complete information and asymmetric information. The paper also puts forward a subsidies improved model under asymmetric information and theoretically proves that the tradable emission permits have equal market efficiency for controlling the four categories of pollutants.(2)The paper considers the random factors into the pollution controlling model, and establishes the multi-vendor game model to figure out the root causes of the "free-rider" problem between manufacturers.(3) Using the static and dynamic game models, the paper analyses the gamble behaviors between central and local governments in option and implementation the environmental protection policies. The paper establishes a dynamic game model containing the government "reputation" and addresses some practical policy conclusions.(4) In view of the current conditions, comparing the differences between developed countries and China in the political structures, economic systems, technical standards, this paper proposes a more appropriate system for China's environmental policy.Based on the study of successful experience from foreign environmental governance and considering the current conditions of the development stage in China's restructuring, this paper introduces the economic analysis and game theory methods into environmental decision-making mechanisms, and well combines environmental-control economic policies with executive orders policies. The paper analyses the gamble relationships between governments and enterprises, enterprises and enterprises, as well as government-to-government relations in the form of asymmetric information. For solving China's environmental problems, the paper pursues a more efficient and flexible environmental policy system, which will undoubtedly have significant realistic meaning.