The information disclosure mechanism of energy saving and emission reduction

In China, the energy saving and emission reduction targets are set and promoted by the government. To achieve these goals, it needs the participation of companies and the public. Information asymmetry may exist between the company and the government, especially when their targets are inconsistent. This paper considers whether companies have an incentive to disclose true information from the game model of the company and the government; analyses the government's first best resolution under the condition that it can get the true information, and the second best resolution which is the incentive-compatible solution under the condition that the government cannot get the true information. Then, we discuss the usefulness of the government's direct supervision and some other approaches.