Evolutionary game analysis for government regulations in a straw-based bioenergy supply chain

Abstract

Many countries are devoting considerable efforts to replace fossil energy with renewable energy to achieve ‘Carbon Neutrality’. Straw-based bioenergy is considered as a potential substitute of fossil energy. This paper investigates the government regulations (i.e. penalty and subsidy policy) for a straw-based bioenergy supply chain consisting of power plants and farmers, in which the three parties are of bounded rationality. We develop a three-party evolutionary game model and obtain the evolutionary stable strategies of the three parties. We establish the dynamic penalty model and show that the dynamic penalty policy can encourage power plants to use bioenergy and farmers to collect bioenergy than the existing static penalty policy. Our results further demonstrate if the proportion of the farmers choosing the ‘Collecting bioenergy’ strategy is low, the government should choose the ‘Penalizing the farmer’ strategy; otherwise, the government should choose the ‘Penalizing the power plant’ strategy. We also extend our model to the government's subsidy policy and compare it with the penalty policy. Specially, when the proportion of the power plants (farmers) using (collecting) bioenergy is high, if the government's subsidies are lower than penalties, the government should choose the subsidy policy; otherwise, the government should choose the penalty policy.