The effects of regulatory mechanism on enterprise carbon reduction policies

Xi Zhang, Qingyuan Zhu, Petr Hajek, Brian Lucey and Mohammad Zoynul Abedin

Research in International Business and Finance, 2025, vol. 78, issue C

Abstract: This paper aims to explore the influencing factors for the optimization of regulatory mechanisms in stimulating enterprises’ implementation of carbon reduction policies, by establishing an evolutionary game model involving government, enterprises, independent regulators (IR) and the public. Results show that: (1) six equilibrium points exist satisfying stability criteria, including one ideal state where enterprises implement carbon reduction policies under IR supervision with the complementary force from the public, without government subsidizing. (2) Enterprises’ positive policy implementation correlates closely with reduced supervision costs and increased economic costs caused by reputational losses, and the reduction in public participation costs can promote enterprises and IR to choose the positive strategy. (3) Enhanced government financial incentives and penalties can facilitate enterprises’ carbon reduction implementation. This study evaluates multi-player cost-benefit trade-offs, providing evidenced references for the policy making to optimize the regulatory mechanism in China.

Keywords: Regulatory mechanism; Carbon reduction policies; Evolutionary game theory; The public (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:78:y:2025:i:c:s0275531925002120

DOI: 10.1016/j.ribaf.2025.102956

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