Abstract
A central-local dual governance system is the basic system of environmental governance in China. Co-governance between the central environmental protection department (CEPD) and local environmental protection departments (LEPDs) is an important means to effectively promote China's carbon emission reduction strategy. Accordingly, this paper discusses their interactive decision-making and investigates how to optimize the strategic relationships between the CEPD, LEPDs, and carbon emission enterprises (CEEs) under the dual governance system by constructing a trilateral evolutionary game model and analyzing evolutionary stability strategies, achieving a numerical experiment simulation of evolution processes and determining the impacts of various factors using MATLAB, leading to several countermeasures and suggestions. The results indicate that the CEPD should rationally use the incentive mechanism for LEPDs, improve the carbon tax system, and further penalize the nepotistic relationship of LEPDs and CEEs. Furthermore, it is essential to reform the current LEPD performance evaluation system and reduce the cost of LEPD positive regulation through subsidies and financial transfer payments. Additionally, the CEE strategy is affected by carbon reduction tax rates, penalties, subsides, and emission reduction costs and revenues. This study reveals the consequences of interactions between CEPD, LEPDs, and CEEs and presents options for the redesign of incentive and regulatory mechanisms to improve carbon emission reduction performance in China.