Cost Report Model Based on the Mechanism of Low-carbon Subsidies.

Abstract: Along with the progress of low-carbon economy, it becomes a common topic around the world to reduce high-carbon energy consumption and decrease greenhouse gases emission. At early stage, providing subsidies (e.g., cash, tax allowance) based on upgrading cost is an effective approach for government to induce enterprises to ameliorate production mode and innovate technologies, which may also cause enterprises to pursue more subsidies by false cost report. How can we design models to get incentive compatibility between subsidies and honest cost report? Models based on the principal-agent theory were built to achieve the goal in this paper, and they were proved by mathematical reasoning not only to meet the need of policy inducing but also to make enterprise declare their lowcarbon upgrading cost honestly. The theoretical result was also verified by a simulation example in this paper. [Copyright &y& Elsevier]