Research On Government Environmental Policy-making And Emission Reduction Decisions Of Firms Considering Public Environmental Awareness

With economic development,the environment which human beings survive on is suffering serious damage.As the important parts of environmental issues,global warming and air pollution are particularly prominent.Meanwhile,public environmental awareness is increasing.People tend to evaluate the health and environmental damages caused by pollution emissions with higher monetary value,and more and more citizens begin to pay attention to the environmental performance of products and present their green preference in choosing products.Focusing on the above two environmental issues and considering public environmental awareness,this thesis explores government environmental policy-making and emission reduction decisions of firms using game theory(including Stackelberg game and Cournot game),in order to provide useful managerial insights for policy-makers and firms in the development of sustainable economy.The contents of this reseach are as follows:First,this thesis explores how the change of public environmental awareness impacts the making and choice of market-based environmental policy.It is shown that in response to a unilateral increase in public environmental awareness,domestic environmental policy is set more stringent to reduce the pollution emissins of domestic firms.But this in turn provides foreign government with a strategic incentive to relax its policy-making.Accordingly,taxes lead to the result that foreign region can get a free ride and thus increases its emissions.And through international emission trading scheme,foreign emissions are reduced,but foreign region benefits more from the permit market.Under these two environmental policies,the improvement of public environmental awareness in any region can improve environmental quality.Moreover,when public environmental awareness in one region is sufficiently large,the emission trading scheme is superior since it leads to lower total social cost than taxes.However,in reality,public environmental awareness is bounded.Therefore,for global environmental problems(such as global warming),the emission trading scheme is superior.And for regional environmental problems(such as an air pollutant),it divides into two cases: when pollution spillover is relatively large,the emission trading scheme is superior;otherwise,the tax regime is superior.However,neither of the two market-based policies leads to the efficient outcome,since the differences in public environmental awareness among regions are not taken into consideration.Second,based on the differences in public environmental awareness among regions,especially for air pollution,this thesis improves the currently uniform taxes and one-for-one emission trading scheme so that pollution emissions from firms are penalized at different tax rate or permit price,and analyzes the incentives provided by the improved policies to adopt clean technology.The results show that compared with the currently market-based policies,differentiated policies can lead to the socially optimal degree of clean technology adoption,and provide greater incentives for firms in high environmental awareness locations to adopt clean technology.Especially,when marginal damages are constant,under differentiated taxes,the tax rate of each firm equals its constant marginal damage;under differentiated emissions trading,the trading ratios of firms only relate to public environmental awareness.Based on the above results,this thesis divides China into province-level regions and constructs a differentiated national emission trading market,in order to provide practical guide for Chinese government to regulate PM2.5 and other air pollution.Specifically,first concludes the impact factors of environmental awareness in China through reviewing existed literature.Then,compute the relative magnitude of public environmental awareness of each province by the entropy method.Finally,compute the emissions trading ratio between firms,which equals the ratio of environmental awareness in their locations.For example,the region with highest environmental awareness is Beijing.And if a firm in Beijing emits excess of one unit of pollution,the firm should buy more than one unit of permits from the other provices.Third,this thesis focuses on the impact of environmental policy(taking carbon trading mechanism which is the most widely used as an example)and consumer environmental awareness on emission reduction of firms.In order to make this theoretical research more practical,a dual-channel supply chain is taken as the background.The discussions are divided into two cases.In the first(second)case where the initial proportion of consumers preferring the online direct channel(traditional retail channel)is "larger",the direct sale price of low-carbon products could be set higher than(equal to)the wholesale price.In both cases stricter carbon trading policy and higher low-carbon preference stimulate manufacturer to reduce carbon emissions in its production process.However,improving consumers' low-carbon preference is more acceptable for supply chain members,since it always benefits manufacturer and retailer.In comparison,with the increase of carbon price,the profits of firms decrease first and then increase.But in practice,the carbon price does not raise high enough to reduce large-scale emissions with low-carbon technology adoption."Low-carbon preference" should be used as a policy instrument to promote low-carbon production.When the policy is implemented strongly,the carbon policy is also acceptable for firms,which encourages firms to carry out cleaner production.