Impact of market regulation on economic and environmental performance: A game model of endogenous green technological innovation

Government market regulation is an important measure to overcome market failure. Most previous studies have classified regulation as a factor that directly affects the decision-making of green technological innovation of enterprises (EGTI); however, there has been no systematic analysis of the effects of market regulation on EGTI performance. This study constructs a Stackelberg game theory model of endogenous EGTI to analyze the economic benefits and waste emissions of enterprises in five research scenarios covering different decision methods and regulatory types. Using the linear programming method, different intensities and types of regulation are assigned to different performance optimizations. The sensitivity of various exogenous variables to the economic benefits and waste emissions of enterprises in different scenarios are also analyzed. The results show that government market regulation can significantly improve levels of EGTI and that it is affected by cooperation between enterprises. In centralized decision-making scenarios, system emissions will decrease and system economic performance will improve. Under market regulation, irrespective of decision type, the system's economic performance will improve. For waste emissions of enterprises, market regulation under centralized decision-making can reduce the effects, and market regulation under independent decision-making can increase the effects. With the introduction of market regulations, and for any type of decision, the intensity of waste emissions decreases. In the competitive regulation decision scenario, both the system's waste emissions and its economic benefits are minimized. These results show that promoting cooperation between different enterprises can effectively reduce waste emissions and improve economic performance; different regulations have different effects, and there is a quantitative-offset effect. This study contributes to greater understanding of these effects by building a game model of endogenous EGTI, simulating the equilibrium level under five different scenarios, and analyzing the relationship between economic benefits and waste emissions under different scenarios. (C) 2020 Elsevier Ltd. All rights reserved.