Inderscience Publishers

The game analysis of negative externality of environmental logistics and governmental regulation

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This paper mainly discusses the negative externality problems involved in environmental logistics and the necessity of government regulation, and the government's role in resolving negative externality. In the process of greenisation, as the allotment of interests after the internalisation of exterior cost is concerned, there have been a series of games among subjects of logistics systems, including game between enterprises and environment, game among enterprises and game between government and enterprises. Through the analysis of game model, we conclude that we should avoid rent–seeking behaviour and at the same time economic incentives based on market are the most effective way to resolve negative externality. Environmental logistics cannot only rely on the forces of the market. The government should play a greater role. The government should speed up the course of greenisation in China by broadening the dissemination of environmental logistics, formulating criteria for judging the degree of environmental logistics, offering financial subsidies on environmental logistics, and guiding the related enterprises in engaging themselves in the work of technology development.

Keywords: environmental logistics, game analysis, government regulation, negative externality, environmental pollution, rent–seeking behaviour, economic incentives, China, greening, technology development

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