| Summary: | Issuance effects are regarded as one of the most important aspects referring to the regulatory guidelines of green corporate bond ratings. This paper developed a new incentive difference Hotelling model, considering four major factors, i.e., the direct effect of issuance, the indirect effect of issuance, the reputation of rating agencies and the regulatory penalties. In this model, how the direct effect and the indirect effect impact the dual rating mechanism and the integrated rating mechanism was discussed. Numerical experiments were conducted to explore the regulatory effects on the two defined mechanisms in different situations. The results demonstrate that under each mechanism, the direct and indirect effects of issuance indirectly improve the effectiveness and efficiency of regulation by increasing the environmental benefit information content in the rating information, and the indirect effect has a greater impact. Moreover, it provides specific recommendations for the design of a regulatory regime.
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