Research on the cooperative mechanism of government and enterprise for basin ecological compensation based on differential game

Ecological compensation is an important means of basin pollution control, the existing researches mainly focus on the government level ignoring the important role of enterprises. Therefore, this paper introduces enterprises into the process of ecological compensation. Firstly, suppose the ecological compensation system composed of government and enterprises, the government is in the dominant position. The ecological compensation input of the government and enterprise will produce social reputation, and the ecological compensation of enterprise will also produce advertising effect. Consumer demand will be affected by social reputation and advertising effect. Then, the compensation strategies of the government and enterprise are analyzed by constructing the differential game model. The research shows that under certain conditions, the cost-sharing mechanism can realize the Pareto improvement of the benefits of government, enterprise and the whole system. Under the cooperative mechanism, the benefit of the government, enterprise and the whole system is optimal. Finally, the validity of the conclusion is verified by case analysis, and the sensitivity analysis of the relevant parameters is carried out. The conclusion can provide reference for government to establish sustainable watershed ecological compensation mechanism.