Abstract
Abstract Pollution cost control is key to solve pollution problem. The paper takes pollution control cost of pollution control contract between management authority and pollutant discharge enterprise as research object, considers pollution control quality level, pollution control quality inspection and pollution control cost model, and establishes pollution control cost model of management authority and pollutant discharge enterprise, including rational constraints of pollutant discharge enterprise. And it analyzes principal-agent relationship between the two under condition of asymmetric information, and un-observability of pollution control level is shown as hiding information of sewage enterprises. In essence, it is problem of adverse selection in principal-agent. Pollution control cost of management is objective function. The first order condition of pollution control cost of sewage enterprise is transformed into state space equation, and optimal control of problem is solved by using maximum principle. In particular, management authority, as principal, uses pollution control provisions to reward, punish and encourage pollutant discharge enterprises as agents.
Highlights
Emission cost control is key to solve problem of pollution[1]
The paper takes pollution control cost of pollution control contract between management authority and pollutant discharge enterprise as research object, considers pollution control quality level, pollution control quality inspection and pollution control cost model, and establishes pollution control cost model of management authority and pollutant discharge enterprise, including rational constraints of pollutant discharge enterprise. It analyzes principal-agent relationship between the two under condition of asymmetric information, and un-observability of pollution control level is shown as hiding information of sewage enterprises
The first order condition of pollution control cost of sewage enterprise is transformed into state space equation, and optimal control of problem is solved by using maximum principle
Summary
Under premise of implementation of emission permit system, emission enterprises can purchase emission rights provided by management authority. Less literatures focus on study of applying theories of principal-agent, asymmetric information on pollution cost and/or establish relative control models which is an urgent problem to be solved. The paper analyses principal-agent relationship between the two under condition of asymmetric information, and inconceivability of pollution control level is shown as hiding information of sewage enterprises. In essence, it is a problem of adverse selection in principal-agent. Management authority, as principal, uses pollution control provisions to reward, punish and encourage pollutant discharge enterprises as agents
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