| Since the reform and opening up, China has made great achievements in economic development, but we are faced Increasing environmental pollution at the same time. The traditional literature is mainly based on the view of environmental Kuznets curve, nature of public goods and externality to study the environmental pollution. But the particularity of environmental pollution decides that government is an important role in the environmental pollution control, especially in the Chinese government leading economy type. So to analyze the behavior of the government is conducive to study the environmental pollution.In order to explain the internal logic of environmental governance dilemma, this paper constructs an analysis frame based on the Chinese style decentralization structure of fiscal decentralization and political concentration from the view of a game model of central-local’s and inter-government’s competition. This analysis frame is benefit to explain how the fiscal decentralization and GDP promotion tournament influence the local government’s environmental governance behavior. This paper also tests empirically the relationship between Chinese style decentralization and the local government environmental expenditure, the competition between local government’s environmental expenditure using 2003-2012 provincial panel data.Theoretical study results are as follows:firstly, local governments stress on the infrastructure investment and ignore the environmental protection and governance, because of central government paying more attention to the rapid economic growth and local governments paying more attention to the receipts. Secondly, in the condition of capital mobility, we will find that, in the areas having high resource endowment, the governments pay more attention to infrastructure than environmental protection and governance. But the contrary result will be happened in the areas having low resource endowment. Thirdly, when the environmental public goods supply is complementary in the inter-governments, local governments will increase environmental public goods supply because of rising spillover effect. When the environmental public goods supply is substitute in the inter-governments, seesaw phenomenon will be take place in the two local governments at the same time because of rising spillover effect.At the same time, this paper builds a spatial econometric model aiming to figure out the strategic interaction mode and formation mechanism about local governments’ environmental expenditure, using the provincial panel data from 2003 to 2012 and the generalized moment estimation method. The study founds that:firstly, the behavior of local governments’environmental expenditure has significantly strategic interaction; Secondly, the behavior of local governments’environmental expenditure produces significant competition effect, but the spillover effect is not significant; Thirdly, Chinese fiscal decentralization significantly is out of the local government’s environmental expenditure.On the basis of theoretical and empirical analysis, this paper argues that we must design the government’s incentive mechanism to change the local government’s "heavily economic growth, lightly environment governance" behavior mode, realizing the government behavior from "growth for competition "to" competition for harmony". Firstly, we need adjust the current environmental management system, take apanage management and vertical management, strengthening the environmental management agency authority. Secondly, we need adjust the achievements appraisal index system of central government to local government, include in the index system of "green GDP" replacing GDP achievements appraisal mechanism, improve the public environmental satisfaction in the examinational and cadres to promote employment. Thirdly, we need improve the longitudinal and transverse fiscal transfer payment system, establish a fair and reasonable ecological compensation mechanism in environmental governance.
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