How to stimulate Chinese energy companies to comply with emission regulations? Evidence from four-party evolutionary game analysis

Abstract

Based on the current organization of China's energy regulatory system, we have established a four-party evolutionary game model involving the central energy regulatory agencies, local energy regulatory agencies, energy companies and whistleblowers. The game strategies and behavior evolution of each party have been analyzed. There are at least 25 equilibrium points in the four-party game system, including 16 pure-strategy equilibrium solutions, 6 dual-strategy equilibrium solutions, 2 three-strategy equilibrium solutions, and 1 mixed strategy equilibrium solution. According to the Lyapunov stability condition, we obtain 8 possible conditional stability points and their evolutionarily stable strategy, which represent the possible strategic equilibrium of various stakeholders in the supervision of energy pollution and reporting. We also simulated and analyzed the behavior differences and optimization paths of various stakeholders, and the final evolution results and influencing factors have also been deduced. The main conclusions are: (1) Public supervision and whistleblowing could reduce the opportunity cost of inspection by central energy regulatory agencies. (2) There is a significant positive correlation between energy supervision and the penalty cost on energy companies for non-compliant pollution emission. (3) There is a significant positive correlation between energy supervision and long-term social welfare. Finally, policy implications and corresponding recommendations are provided.