The Government Subsidy Policies for Organic Agriculture Based on Evolutionary Game Theory

Abstract

Organic agriculture is a sustainable form of farming that can protect the environment. However, the high production costs of organic agriculture deter farmers from switching to organic farming. To support the development of organic agriculture, many governments offer subsidies to farmers or retailers. We develop an evolutionary game model to investigate the effect of government subsidies on organic agriculture and the conditions under which the government should subsidize farmers or retailers. We find that subsidizing farmers or retailers can promote agricultural development. Government subsidies lower the requirement for social responsibility and the premium that retailers offer. Furthermore, if the consumer’s social responsibility is sufficiently low, the government’s best choice is to subsidize retailers. If the social responsibility premium is medium, the government’s best choice is to subsidize farmers. Finally, higher subsidies motivate more farmers to produce organic products when the government subsidizes retailers. Conversely, if the government subsidizes farmers, it is more conducive to reducing the burden on retailers to purchase organic products.