Game Analysis on the Government’s Economic Subsidy in Regional Environmental Protection

Abstract

From the perspective of game theory, this paper analyzed the promotion effect of government subsidy policy on environmental governance. Three main results were obtained as follows. 1. A positive effect is achieved when the government increases the amount of penalties imposed on companies and uses fines as a reward subsidy to environmental companies. Such policy can not only improve the probability of pollution control by enterprises, but also enable the government to reduce the regulatory costs in environmental issues. 2. When government departments choose small enterprises for environmental protection subsidies, they can not only greatly increase the probability of pollution control by enterprises, but also increase the complexity of government supervision. 3. The government needs to strengthen supervision to maintain the high probability of pollution control by enterprises.