Mechanism Design for the Joint Control of Pollution

Abstract

From the perspective of the central government, this paper analyzed that the externality of pollution control would lead to market inefficiency, and studied the implementation in dominant strategy equilibrium and sub-game perfect Nash equilibrium. Study found: Market inefficiency came from private information and inadequate supervision of the mechanism designer, and the sufficient and necessary conditions of implementation in Nash equilibrium have been gotten, also a dynamic mechanism to realize the joint control of regional air pollution was built. At the same time, a mechanism with asymmetric information was posed to implement the goal function in dominant equilibrium. At present, the air pollution control is a huge pressure in China. Because of the negative externalities of air pollution, a province alone cannot solve the basic problem. The State Council issued the document no. 37 《air pollution prevention action plan》 (2013) which was put forward to designing a joint control of regional air pollution mechanism for Beijing-Tianjin-Hebei or Yangtze River Delta, and coordinating the central government and the relevant departments of state council to solve the regional prominent environmental problems. However, the mechanism design for the joint control of pollution is a key problem. Some scholars have used the game theory to study the pollution control problem, but the number of research on the joint control is less. J. Xue ec etl. (1) established a beijing-tianjin-hebei inter-provincial atmospheric pollution control model and discussed the Shapley value of cooperative allocation from the regional pollution control perspective. In the model, if parameters such as the maximum and minimum processing ability of the provinces are real statistical data, then results are more accurate. The game models of pollution control among different players have been constructed. W. Dungumaro