RESEARCH ON THE PRINCIPAL-AGENT PROBLEMS IN CHINA’S LOW-CARBON ECOLOGICAL URBAN CONSTRUCTION

Shuiping Zhang

School of Economy and Management, Anhui University of Science and Technology, Anhui Province, China

 In the game of the interest bodies of low-carbon ecological urban construction, the central government, as a principal, will lose some interests in some ways because of information disadvantages, whereas the local governments, as agents, will make use of their information advantages to make profitable action choices for more interests. As a result, moral risks will appear for the latter. This paper attempts to construct a mathematical model of the game theory for the principal-agent problems in the low-carbon ecological urban construction and analyses the choice actions involved. The conclusion is drawn that for the optimal balance of the game to be realized between the central and local governments, a relevant system must be established. This system is expected to change the information asymmetry by increasing the central government’s ability to acquire information while stimulating or restraining the local governments’ choice actions so that the external pressure on the local governments will be turned into their internal actions in a low-carbon ecological urban construction.