Analysis of a Multiparticipant Game under a Subsidy and Punishment Mechanism: An Evolutionary Theory Perspective

Abstract

In a market with intense competition, cost pressures tempt enterprises to seek profits in ways that infringe on the interests of consumers. This is especially true when market sentiment is weak. In such situations, governments play a vital role in protecting consumers’ interests and helping struggling enterprises. We construct a tripartite game model that includes the government, enterprises, and consumers under a subsidy and punishment mechanism. We use this model to investigate the strategic choices made by the participants in an evolutionary game theory (EGT) framework. We present four stable equilibrium points as pure strategy solutions with the aid of a replicator dynamic system. Three main findings are presented in this paper. First, not all equilibrium points can be evolutionary stable strategies (ESSs) when considering the potential motivations of the participants to change strategies. Second, there is an equilibrium point that satisfies the stability condition but changes periodically in its strategy space; strategy changes between participants are not synchronized. Third, the government prefers to subsidize enterprises when enterprise speculation is serious or when enterprise investment in improving production technology is high.

Mathematical Problems in Engineering Pharmaceutical Cold Chain Transportation Decision Making under the Government’s Reward–Penalty Mechanism: A Perspective of Evolutionary Game Theory

“…For example, He et al [17] considered the effect of government subsidies on manufacturers' channel selection and proposed that an appropriate level of subsidies would help reduce channel competition. Based on the background of the COVID-19 epidemic, Li and Yang [18] discussed the innovation incentive effect of government subsidies on enterprises and the consumption stimulation effect on consumers. Yu et al [19] designed a model on subsidies for home appliances to the countryside and found that subsidies can help improve consumer welfare.…”