Dynamic game evolution complexity of new energy and fuel vehicle manufacturers under carbon cap‐and‐trade policy

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AbstractConsidering customers' preferences for low‐carbon products, the paper delves into the short‐run and long‐run repetitive game involving three oligopolistic manufacturers engaged in the production of new energy vehicles (hybrid electric vehicles [HEV] and battery electric vehicles [BEV]) and conventional fuel vehicles (FV) within the framework of a carbon cap‐and‐trade policy (CaT). In the short‐run game model, this study explores the optimal decision of oligarchic manufacturers and analyzes the efficiency of the supply chain in the context of cooperation and non‐cooperation. In the long‐run repetitive scenario, the article examines the optimal decision of the manufacturer, assuming rational economic behavior aimed at maximizing individual profits within a non‐cooperation game strategy. Finally, the paper investigates the elements that influence the efficiency of the supply chain. The results reveal that (1) fuel vehicles possess greater flexibility in adjusting parameters compared to the other vehicle types; a judicious increase in manufacturers' price adjustment parameters in the stability domain is beneficial to their respective profits and enhances the overall supply chain profitability. (2) Maintaining customers' preference for low‐carbon products within a reasonable range is crucial for the mutual benefit of all manufacturers. (3) The government needs to allocate more carbon emission limits to fuel vehicle manufacturers in order to improve supply chain efficiency.