Research on mechanisms to incentivize corporate environmental responsibility based on a differential game approach.

Abstract

As major polluters, enterprises are expected to behave responsibly toward the natural environment. However, enterprises often do not pay enough attention to the environment and may even be environmentally irresponsible. Encouraging enterprises to actively accept environmental responsibility is the key to solving the problem of environmental pollution. This paper uses a differential game model to study the impact of different governmental incentive mechanisms on corporate environmental responsibility (CER). The results of the study show that independent, noncooperative decision-making by the government and the enterprise is not desirable. If the government provides a monetary incentive to the enterprise or sets a corporate pollution threshold to stimulate enterprises' acceptance of environmental responsibility, environmental quality can be improved. These results lead to useful policy recommendations and a scientific basis for environmental governance, which is expected to be helpful for finding ways to balance economic development and environmental protection in developing countries more generally.