Sustainable supply chains under government intervention with a real-world case study: An evolutionary game theoretic approach

Abstract

Abstract It is clear that the problem of global warming and greenhouse gas emissions is one of the most important and challenging issues in recent years. Governments have a key role in managing this crisis. They can influence the polluting activities of producers by enacting policies and applying incentives. In addition, government policies can also affect the production and competitive markets of industries. Applying too-strict policies can lead to significant reductions in producers’ profit, and even complete business closure. For the first time, this paper models the contrast between government objectives and producers' targets, using a two-population evolutionary game theory approach under different scenarios. Three different scenarios are considered for government. In the first scenario, the government imposes taxes and subsidies to maximize its profit with an upper bound for total environmental impacts. In the second one the government chooses tariffs that minimize total environmental impacts by considering a lower bound for its profit. Finally in the third scenario, the government makes a trade-off between its profit and environmental objectives by a linear combination in an objective function. Using two-population evolutionary game theory approach, the performance of supply chains members under different government scenarios is modeled. Finally, the proposed sustainable model is applied to the Indian textile industry. The results show that government policy clearly affects producers’ activity, competitive markets and emissions. Imposed tariffs are the most effective government approach to minimizing environmental impacts.