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Discrete Dynamics in Nature and Society
Volume 2016, Article ID 7694048, 5 pages
http://dx.doi.org/10.1155/2016/7694048
Research Article

The Dynamic Evolution of Firms’ Pollution Control Strategy under Graded Reward-Penalty Mechanism

School of Economics and Management, Southeast University, Nanjing, Jiangsu 211189, China

Received 22 November 2015; Accepted 8 February 2016

Academic Editor: Miguel Ángel López

Copyright © 2016 Li Ming Chen and Wen Ping Wang. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

The externality of pollution problem makes firms lack enough incentive to reduce pollution emission. Therefore, it is necessary to design a reasonable environmental regulation mechanism so as to effectively urge firms to control pollution. In order to inspire firms to control pollution, we divide firms into different grades according to their pollution level and construct an evolutionary game model to analyze the interaction between government’s regulation and firms’ pollution control under graded reward-penalty mechanism. Then, we discuss stability of firms’ pollution control strategy and derive the condition of inspiring firms to control pollution. Our findings indicate that firms tend to control pollution after long-term repeated games if government’s excitation level and monitoring frequency meet some conditions. Otherwise, firms tend to discharge pollution that exceeds the stipulated standards. As a result, in order to effectively control pollution, a government should adjust its excitation level and monitoring frequency reasonably.