Incentive Mechanism about Carbon Emissions

Based on shared responsibility on carbon emissions, this paper argues that consumer and enterprise should both be included in mechanism about carbon emissions. Based on Coase´s analysis of externalities and his theory of property right, this paper gives environment property of low emission requirements to consumers, and entrusts the process of consumers´ buying goods from enterprises as the principal-agent process that consumers authorize enterprise to produce product of low emission, thus has designed an incentive mechanism about carbon emissions. The results indicate that to ensure enterprises of low emissions to participate in the production, a certain information rent must be paid to the enterprise of high emissions, namely carbon emissions is a balance between the rent extraction and allocation efficiency.