Rent-seeking analysis of carbon emission verification based on game theory and prospect theory from the perspective of multi-participation

Abstract

Emissions trading system (ETS) is an important tool to promote carbon emission reduction. Accurate emission data is the basis for the comprehensive benefits of ETS. However, carbon emission companies and third-party verification agencies conspired to falsify carbon emission reports. Therefore, this paper builds a three-party game model among carbon emission companies, third-party verification agencies and the government to study rent-seeking behaviors. Moreover, the prospect theory is introduced to characterize the bounded rationality of the participants to make the game process closer to reality. On this basis, the strategy evolution trend of participants under the influence of various factors is analyzed. Finally, simulation analysis is carried out under the background of Shenzhen ETS, and suggestions are put forward for the government to develop the carbon emission report re-verification mechanism. The results show that: 1) Driven by economic benefits, carbon emission companies and third-party verification agencies have high rent-seeking intentions, which do not change with the re-verification policy; 2) Higher review probability can effectively inhibit rent-seeking behavior; 3) The choice of government strategy is related to the success rate and the cost of re-verification, and the income and penalty of rent-seeking, and these factors have obvious thresholds.