The coordination of stakeholder interests in environmental regulation: Lessons from China’s environmental regulation policies from the perspective of the evolutionary game theory

Abstract

China is currently trying to improve the quality of the environment by developing a series of environmental regulations. However, conflicts of interest between the national government, local governments, and enterprises often negatively affect the implementation of such policies. This study conducted a theoretical analysis of the evolutionary stable strategies of the national government, local governments, and enterprises in China, to explore the factors that influence the strategies of various stakeholders and examine incentive-compatible environmental regulation policies, by using a tripartite evolutionary game model. Numerical simulations were introduced to examine the asymptotic stability of various evolutionary stabilization strategies and the effects of parameter variation on these strategies. The results demonstrate that national government supervision is critical to achieving the goals of environmental regulation policies since the supervision costs can influence the final evolutionary stable strategy. Although the employment losses caused by environmental regulation will affect the national government’s payoffs, the national government’s strategy depends on the costs and expected benefits of the strategy itself. Moreover, increased default penalties and compliance incentives can encourage local governments to enforce environmental regulations more effectively, thereby alleviating conflicts of interest among various stakeholders. Therefore, non-democratic and non-Western states need to design incentive-compatible environmental regulation policies according to various influencing factors to coordinate the interests of stakeholders.