Supervision after certification: An evolutionary Game Analysis for Chinese environmental labeled enterprises

Abstract

An eco-labeling scheme is a method of environmental performance certification that is beneficial for reducing negative environmental impacts and promoting green consumption. Many types of research studies have shown its effectiveness. However, to the best of our knowledge, fewer studies have considered how to supervise and regulate the enterprises after getting certificated. An enterprise may have obtained certification that its product meets the corresponding environmental standards, but without effective supervisions and regulations, it may not continue to implement the standards after being certified. Such behaviors are not only unfavorable to environmental protection, they also harm the eco-labeling scheme. With the consideration that different eco-labeling schemes and standards would result in different interaction relationships among stakeholders, we focus on Chinese Environmental Labeling (CEL), which is a government-sponsored scheme. By utilizing the approach of evolutionary game theory, we built a model including the government agency and enterprise and their strategic interactions. Numerical analyses are applied to verify the modeling analyses and demonstrate the influences of game parameters. Our results indicate that supervisions from the government side are necessary in order for the enterprises to implement the standards, but high supervision costs and low efficiency are the main factors that prevent the government agency from getting more involved. Reducing the executing costs of the enterprises would prompt them to participate more. Additionally, if the government agencies and customers could have a bigger, more positive influence on the enterprises, then the enterprises would likely choose to implement the standards. Our results provide references for the better development of an eco-labeling scheme as well as government environmental policy-making.