Incentive contracts and optimal green technology choice: A differential game analysis
Yufeng Chen, Liming Li
Keywords:
Differential pollution game, emission reduction, green fund, green technology, pollution control
Abstract:
This study explores the use of government subsidies to encourage the production of low-carbon products in supply chains involving local governments and firms. The government can offer technical subsidies (OT), financial subsidies (OF), and combined fund-technology subsidies, categorized as fund-technology (FT) and technology-fund (TF) modes. Four game models are developed to thoroughly examine firms’ decision-making processes under these subsidy modes, focusing on firm income, pollution control, and emission reduction efficiency. The findings reveal that the OT mode achieves the highest emission reduction efficiency, while the OF mode results in the best firm income. Mixed modes exhibit the highest level of pollution control, particularly under the FT mode. Consequently, the government should employ distinct subsidy modes based on specific emission reduction targets to maximize benefits. These conclusions provide valuable insights for international policymakers.
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 Incentive contracts and optimal green technology choice: A differential game analysis [PDF file] [Filesize: 798.7 KB]
 10.7441/joc.2025.01.13
Chen, Y., & Li, L. (2025). Incentive contracts and optimal green technology choice: A differential game analysis. Journal of Competitiveness, 17(1), 285-309. https://doi.org/10.7441/joc.2025.01.13
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