An Evolutionary Game Model Between Governments and Manufacturers Considering Carbon Taxes, Subsidies, and Consumers’ Low-Carbon Preference

• Published in: Dynamic games and applications 2022-06, Vol.12 (2), p.513-551
• Main Authors: Hu, Zhi-Hua, Wang, Shu-Wen
• Format: Article
• Language: English
• Subjects: Carbon; Communications Engineering; Computer Systems Organization and Communication Networks; Consumers; Decision making; Economic Theory/Quantitative Economics/Mathematical Methods; Economics; Emission; Environmental tax; Evolution; Game Theory; Management Science; Mathematical models; Mathematics; Mathematics and Statistics; Networks; Operations Research; Preferences; Social and Behav. Sciences; Subsidies; Supply chains; Taxes
• ISSN: 2153-0785; 2153-0793
• DOI: 10.1007/s13235-021-00390-3

The manufacturers, their products’ consumers, the governments, and even various stakeholders in the supply chains affect the low-carbon and low-emission actions facing climate changes. The governments encourage the manufacturers to produce low-carbon products by carbon taxes and subsidies, while the consumers make their purchase decisions with low-carbon preferences to affect the markets of products. We formulate the interactions among the manufacturers, consumers, and governments by evolutionary games between the manufacturers and governments based on the static carbon taxes and subsidies. Moreover, we also considered the interactions’ dynamics and evolutions in behavioral strategies, where the consumers’ low-carbon preferences revise the manufacturers’ market shares. Additionally, we couple the static and dynamic carbon taxes and subsidies to revise the evolutionary game model of static carbon taxes and subsidies. We analyzed the equilibrium points’ stabilities and the evolutionary stable strategies for the models. Then, we conducted numerical simulations to investigate the evolutionary games’ paths under governments’ various low-carbon and subsidy strategies and consumers’ low-carbon preferences. As revealed by the experimental results, the strategies based on dynamic carbon taxes and subsidies outperform static strategies for manufacturers’ decision-making. Different combinations of dynamic strategies contribute to different impacts on the manufacturers’ willingness to adopt low-carbon technologies. Static carbon tax and dynamic subsidy mechanism are conducive to more manufacturers to adopt low-carbon production technologies. The bilateral dynamic carbon tax and subsidy mechanism converge more quickly than other mechanisms for adopting low-carbon technologies. The consumers’ preference for low-carbon imposes a significant impact on the manufacturers’ decision, which indicates that the coordinative pressures from supply chain members are critical to the manufacturers’ low-carbon strategies and affect the outputs more directly. Governments need to make some dynamic strategy adjustments flexibly according to low-carbon and low-emission targets.