Abstract

Green credit, emission reduction and implementary uncertainty

Author(s): Ge Lin, Hung Haifeng, Zeng Shihong

Experimented with market-based mechanisms to supply their traditional command and control mechanisms for environmental protectionï¼Ã‚ÂŒgreen credit has become the most important means. This paper uses the game theory model to study the main body behaviour of China’s green credit trading under the uncertain environment. The donor body (government and bank) has implemented information about the political willingness of the enterprise to reduce emissions. The enterprise may be tough or weak on pollution. This paper provides necessary and sufficient conditions for the existence of pooling and separating equilibrium. Perversely, green credit may be invalid, at least in the short run. This is because it provides an incentive for strategic, reputation-building behaviour in the form of excessive emissions.