The evolution mechanism of green products supply and demand in a demand‐driven market

Abstract

AbstractPromoting the production and consumption of green products is one of the essential ways to achieve sustainable development. However, although some studies have explored the evolution mechanism of the supply and demand system, these scholars have not noticed that in today's prosperous economy, demand‐driven markets have become mainstream in many countries. This paper establishes an evolutionary game model with producers and consumers in a demand‐driven market and analyzes the evolution mechanism of the system. The results indicate that (1) producers are willing to produce green products only if they can obtain excess green profits; (2) the lack of supply is the critical factor hindering consumers from purchasing green products; (3) additionally, there are multiple evolutionary paths under different substitution relations of different products; (4) interestingly, green premium and the consumers' sensitivity can simultaneously mitigate the perceived losses even when green products are insufficient. The theoretical and practical implications of these findings are further discussed.