Analysis based on Incomplete Information Dynamic Game about Implementation Effect of Carbon Reduction Policy

Carbon emissions have the characteristics of externality and public product. If we only rely on market regulation, it will produce the phenomenon of “market failure”. So government departments need to play a positive role, and formulate scientific and reasonable emission reduction policies. In order to analyze the implementation effect of carbon emission reduction policy, this paper builds a three stage incomplete information dynamic game model based on the relationship between the central government and local government. Then this paper analyzes and points out the influence factors of carbon emission reduction policy implementation effect. Finally this article selects the panel data of 30 provinces from 2000 to 2012 to verify the result of this game. The results show that the more we reward the local government for its carbon reduction behavior, the better the effect of carbon policy. The greater local government's gain of extra income by resisting the central policies is, the worse the effect of carbon policy. The central government can encourage local governments to actively reduce emissions by improving the probability and strength of punishment for local government' illegal behavior, and at the same time this can increase the income of the central government. If the carbon intensity is high, the local governments have no impetus to reduce carbon emission and the effect of central government's policies will be very poor.