Evolutionary Game Theoretic Analysis of Low Carbon Investment in Supply Chains under Governmental Subsidies

Guang Zhu, Gaozhi Pan and Weiwei Zhang
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Guang Zhu: School of Management Science and Engineering, Nanjing University of Information Science and Technology, Nanjing 210044, China
Gaozhi Pan: School of Management Science and Engineering, Nanjing University of Information Science and Technology, Nanjing 210044, China
Weiwei Zhang: China Institute of Manufacturing Development, Nanjing University of Information Science and Technology, Nanjing 210044, China

IJERPH, 2018, vol. 15, issue 11, 1-27

Abstract: With the rapid development of global industry and economy, excessive carbon dioxide emission has emerged as a critical issue in both developed and developing countries. Using an evolutionary game framework in which game players can adjust their strategies constantly, this paper investigates how to optimize the strategy of low carbon investment for suppliers and manufacturers in supply chains, and discuss the impacts of various factors on evolutionarily stable strategies. Additionally, we examine an incentive mechanism based on governmental subsidies to eliminate free riding and motivate co-investment. Furthermore, a case study and numerical examples are provided for illustration and simulation purposes, leading to several countermeasures and suggestions. Our analytical results show that the strategic choice of low carbon investment is correlated with profit growth coefficients, investment costs and profits from free riding. Investment costs have more significant impacts than other factors on evolutionarily stable strategies, while profit growth coefficients are more important at initial stages in the evolutionary process. The incentive mechanism based on governmental subsidies is an effective solution to motivate co-investment, and governments should take some measures to improve the assess accuracy and supervisory efficiency of investment strategy.

Keywords: evolutionary game; low carbon investment; supply chain; governmental subsidies; free riding (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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