The Study On Competition And Cooperation Between Two Manufacturers With Energy Performance Contracting

With the rapid development of economics, people pursue a higher quality of living while the environmental problem and resource shortage becomes worse. The increase in environmental awareness and environmental pressure gradually forces energy saving, emission reduction and environmental protection to be one of corporation social responsibilities. However, the corporations are profit-oriented so that they will not fulfill this responsibility spontaneously. Therefore, some measures with market mechanism (such as carbon emissions trading system, energy performance contracting) aiming to incentive corporations to pay more attention to environmental protection are proposed and favored worldwide. Thanks to the good operation and supervision mechanism, these measures are running well in developed countries, and achieve the expected goals.The Chinese government published the "Announcement on the future promotion of Energy Performance Contracting" in2000and started to implement energy performance contracting. However, China still lags far behind the developed countries in terms of the development of energy performance contracting, which should be blamed to the lack of support from the Chinese government, including the law support and financial incentive.In recent years, the Chinese government gradually becomes aware of this, and introduces some supporting measures, such tax breaks, subsidies and so on, to encourage the development of energy performance contracting. Motivated by these measures, the energy performance contracting projects implemented between two competing corporates gradually emerge in the energy-saving service market. Unlike the traditional energy performance contracting projects, the energy service providers in these projects also compete with then-clients. Inspired by this, this paper establishes a two-stage game to model the competition and cooperation between both sides of such projects, and investigate the performances of this kind of energy performance contracting projects in terms of profits, consumer surplus and environmental performance.Our results show that:The implementation of energy performance contracting will decrease the production quantity of the corporation offering the energy-saving service, and increase the one of the corporation receiving the service; Both sides of project can achieve the win-win goal in profits; The energy performance contracting project increases the total production volume and decreases the price of the products, thus enlarging the consumer surplus; The energy performance contracting is environmentally superior conditionally; The environmental performance of energy performance contracting is not monotonous in the energy-saving service cost, so the government should be cautious when deciding how to support the energy performance contracting projects.