Study of Externality Controlling Model in Principal-Agent

To establish model of externality controlling, described value functions under outsourcing model of administrator giving pollution controlling business to pollution releasing enterprise in externality controlling, and analyzed externality decisions under different information conditions. Under asymmetric information condition, administrator as principal, the enterprise as agent, established outsourcing's pollution controlling quality evaluation principal agent model. Consider the situation of the enterprise's pollution controlling level was hided, used maximum value axiom derived optimal solutions of administrator's quality evaluation and transfer payment, contrasted results under different information environment. Then, simulation calculation tested and verified analysis result.