Improving the greenness of enterprise supply chains by designing government subsidy mechanisms: based on prospect theory and evolutionary games

Abstract

Fostering sustainable development through green supply chains is of paramount significance. Government subsidies emerge as a successful strategy for motivating businesses to actively participate in such eco-friendly practices. This study employs prospect theory and an evolutionary game model to analyze the transition toward carbon peaking and neutrality while promoting the expansion of highly sustainable businesses. By exploring the decision-making processes of businesses and governments regarding sustainability, we develop an evolutionary game-based decision model to assess the impact of government subsidies on businesses engaged in green supply chains. Through numerical simulation obtained via MATLAB, we examine various factors influencing the evolution of the game system between green supply chain businesses and the government. Additionally, we investigate how government incentives impact the decision-making behavior of green supply chain businesses. Our findings indicate that governmental fines can effectively encourage the adoption of green supply chains. Furthermore, moderate government subsidies incentivize enterprises to opt for sustainable supply chains, benefiting both the government and businesses. However, providing hefty government subsidies not only fails to encourage the adoption of green supply chains but also incurs costs for the government, without yielding any positive change in the businesses’ approach. By incorporating evolutionary game theory and prospect theory, this study contributes to the body of knowledge on government-supported green supply chains, offering incentive programs tailored to the real-world conditions faced by businesses while demonstrating practical application values.