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The Subsidy of Environmental Protection with Incentive Mechanism under Asymmetric Competitors

Chia-Ming Liu, Tsung-Yuan Wang

Abstract



This paper examines principal-agent model with incentive mechanism in environmental protection subsidy tournament under asymmetric competitors. We demonstrate that why it is not easy to get the subsidy for inferiorenvironmental protection technological research company. At the same time, the criteria of tournament can be used as a tool of the policy for the government. We find that if the relative performance is larger than the criteria, then the leader of tournament wins the subsidy; otherwise if smaller than the criteria, then the laggard of tournament wins the subsidy.

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