IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v15y2023i5p4126-d1079179.html

Incentive Mechanism Analysis of Environmental Governance Using Multitask Principal–Agent Model

Author

Listed:
  • Lin Wang

    (School of Economics and Management (Tourism), Dalian University, Dalian 116622, China)

  • Feng Pan

    (School of Public Administration and Humanities and Arts, Dalian Maritime University, Dalian 116026, China)

Abstract

In view of the principal–agent relationship between local government and pollution enterprise in environmental governance, this paper established a multitask principal–agent model, gave the optimal contract form of local government incentive to enterprises, examined the influencing factors of the optimal incentive contract, and focused on analyzing the influences of institutional factors, enterprise types and enterprise attributes on the optimal incentive contract. The results show that the optimal incentive contract is affected by the influence coefficient of enterprise economic benefits on local government revenue, the environmental index weight in government performance systems, the types of enterprise, the risk preference of enterprise, the variance in economic benefits, the variance in pollution emission reduction, the ability of economic benefits, the direct cost of emission reduction and the economic cost (income) of emission reduction. In order to realize the coordinated development of economy and environment, the establishment and adjustment of optimal incentive contract should be established or adjusted according to the institutional factors, different types of enterprise, and the enterprise characteristics. Local governments should divide enterprises into traditional enterprises and green innovative enterprises in the process of management. The policy formulation of the local government should be based on the characteristics of the system and cooperate with the national strategy. Local governments should actively collect and master the attribute information of the enterprises, including risk preference, profit model, pollution control technology and ability, management experience and level, production mode and green innovation ability. Local governments should combine the types of enterprises, the characteristics of institutions and the attributes of enterprises, and adjust various policies and measures more flexibly.

Suggested Citation

  • Lin Wang & Feng Pan, 2023. "Incentive Mechanism Analysis of Environmental Governance Using Multitask Principal–Agent Model," Sustainability, MDPI, vol. 15(5), pages 1-17, February.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:5:p:4126-:d:1079179
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/15/5/4126/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/15/5/4126/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
    2. Partha Dasgupta & Peter Hammond & Eric Maskin, 1980. "On Imperfect Information and Optimal Pollution Control," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 47(5), pages 857-860.
    3. Xepapadeas, A. P., 1991. "Environmental policy under imperfect information: Incentives and moral hazard," Journal of Environmental Economics and Management, Elsevier, vol. 20(2), pages 113-126, March.
    4. Yuhong Xin & Dehui Liu & Xiaoli Li & Stefania Tomasiello, 2022. "Modeling of Multitask Principal-Agent Based on Accounts Receivable," Mathematical Problems in Engineering, Hindawi, vol. 2022, pages 1-10, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yijing Zou & Dayi He & Rui Sun, 2023. "Evolutionary Game Analysis of Risk in Third-Party Environmental Governance," Sustainability, MDPI, vol. 15(18), pages 1-20, September.
    2. Bahareh Abedin & Manuela Rozalia Gabor & Irina Olimpia Susanu & Yousif Fllayyih Jaber, 2024. "Exploring the Perspectives of Oil and Gas Industry Managers on the Adoption of Sustainable Practices: A Q Methodology Approach to Green Marketing Strategies," Sustainability, MDPI, vol. 16(14), pages 1-32, July.
    3. Bahareh Abedin & Youssef Falih Jaber & Manuela Rozalia Gabor & Mahmood Yahyazadehfar & Meysam Shirkhodaie, 2024. "Identifying Factors Affecting the Implementation of Green Marketing Strategy," Economics and Applied Informatics, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, issue 2, pages 14-25.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Spaeter, Sandrine & Verchère, Alban, 2004. "Aléa moral et politiques d’audit optimales dans le cadre de la pollution d’origine agricole de l’eau," Cahiers d'Economie et de Sociologie Rurales (CESR), Institut National de la Recherche Agronomique (INRA), vol. 71.
    2. John Duggan & Joanne Roberts, 2002. "Implementing the Efficient Allocation of Pollution," American Economic Review, American Economic Association, vol. 92(4), pages 1070-1078, September.
    3. Benford, Frank A., 1998. "On the Dynamics of the Regulation of Pollution: Incentive Compatible Regulation of a Persistent Pollutant," Journal of Environmental Economics and Management, Elsevier, vol. 36(1), pages 1-25, July.
    4. Fangqing Zhang & Xiaolong Wu & Shujun Zhang, 2022. "Exploring the Continuous Motivation of Algorithm Engineers under Multiple Objectives: A Mixed-Methods Study," Sustainability, MDPI, vol. 14(22), pages 1-17, November.
    5. Bartsch, Elga, 1997. "Environmental liability, imperfect information, and multidimensional pollution control," International Review of Law and Economics, Elsevier, vol. 17(1), pages 139-146, March.
    6. Bartsch, Elga, 1996. "Enforcement of environmental liability in the case of uncertain causality and asymmetric information," Kiel Working Papers 755, Kiel Institute for the World Economy.
    7. Khanna, Madhu & Zilberman, David, 1997. "Incentives, precision technology and environmental protection," Ecological Economics, Elsevier, vol. 23(1), pages 25-43, October.
    8. James Shortle & Richard D. Horan, 2017. "Nutrient Pollution: A Wicked Challenge for Economic Instruments," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 3(02), pages 1-39, April.
    9. JunJie Wu & Bruce Babcock, 2001. "Spatial Heterogeneity and the Choice of Instruments to Control Nonpoint Pollution," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 18(2), pages 173-192, February.
    10. Dijkstra, Bouwe R. & Rübbelke, Dirk T.G., 2013. "Group rewards and individual sanctions in environmental policy," Resource and Energy Economics, Elsevier, vol. 35(1), pages 38-59.
    11. Huennemeyer, Anne-Juliane & Rollins, Kimberly S., 2001. "Private Resource Management And Public Trust: Optimal Resource Conservation Contracts Under Asymmetric Information," Working Papers 34141, University of Guelph, Department of Food, Agricultural and Resource Economics.
    12. Sandrine Spaeter & Alban Verchère, 2004. "Agricultural pollution of water, moral hazard and optimal audit policies [Aléa moral et politiques d’audit optimales dans le cadre de la pollution d’origine agricole de l’eau]," Post-Print hal-01201071, HAL.
    13. Candel-Sanchez, Francisco, 2006. "The externalities problem of transboundary and persistent pollution," Journal of Environmental Economics and Management, Elsevier, vol. 52(1), pages 517-526, July.
    14. Gerhard Clemenz, 1999. "Adverse Selection and Pigou Taxes," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 13(1), pages 13-29, January.
    15. Tsur, Yacov & Zemel, Amos, 2002. "The Regulation of Environmental Innovations," Journal of Environmental Economics and Management, Elsevier, vol. 44(2), pages 242-260, September.
    16. Susan Feng Lu, 2012. "Multitasking, Information Disclosure, and Product Quality: Evidence from Nursing Homes," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 21(3), pages 673-705, September.
    17. Anja Schöttner & Veikko Thiele, 2010. "Promotion Tournaments and Individual Performance Pay," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 19(3), pages 699-731, September.
    18. McCausland, David & Pouliakas, Konstantinos & Theodossiou, Ioannis, 2005. "Some are Punished and Some are Rewarded: A Study of the Impact of Performance Pay on Job Satisfaction," MPRA Paper 14243, University Library of Munich, Germany.
    19. Bruno S. Frey & Susanne Neckermann, 2005. "Auszeichnungen: Ein Vernachl�ssigter Anreiz," IEW - Working Papers 254, Institute for Empirical Research in Economics - University of Zurich.
    20. Schmid, Andreas, 2007. "Incentive Compatibility and Efficiency in the contractual Insurer-Provider Relationship: Economic Theory and practical Implications: The Case of North Carolina," MPRA Paper 23311, University Library of Munich, Germany, revised 2008.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:15:y:2023:i:5:p:4126-:d:1079179. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.