Who pays for urban environment management? The role of the third-party service provider
The dominant contemporary paradigm of direct state-led urban environmental regulation entails significant risks, including high administrative burden, frequent conflicts with polluting entities, and economic vulnerabilities for those sources. To address these deficiencies, this paper integrates third-party service provider (TPSP) into China's existing management framework as a beneficial extension beyond conventional government intervention. Utilizing an evolutionary game approach, we compare two distinct institutional settings, a non-integration management mode and an integration management mode, and scrutinize the evolutionary dynamics across both two- and three-dimensional systems. To enhance system robustness, we embed a strategic behavior-based dynamic punishment mechanism that effectively eliminates the perturbing effects of varied penalty rules, thereby steering all stakeholders toward an ideal stable state. This comparative institutional analysis isolates the marginal contribution of third-party intermediation, specifies when outsourcing environmental services outperforms direct government enforcement, and reframes evolutionary game theory as a design device for institutional self-correction. Furthermore, a predefined variable importance analysis is conducted to highlight critical factors warranting attention in practical policy implementation. Extensive simulation experiments, carried out under diverse system-level and parameter-level conditions, validate the theoretical properties of our model. The findings offer concrete managerial insights to inform the formulation of more effective urban environmental supervision regulations.