Auto parts quality certification and manufacturer regulation: An evolutionary game theory perspective

Abstract

This paper explores a two‐population evolutionary game that models the role of manufacturer regulation as a motivation to auto parts quality certification. In particular, we assume that auto parts suppliers can choose whether or not to obtain the certification, ensuring a relatively high quality of the products, and manufactures can choose whether or not to engage in regulation for certification facilitation, influencing the suppliers' incentive to avoid punishment of uncertificated products. We study the Nash equilibria of this game and conduct static and dynamic evolutionary analyses. The research shows that reducing the auto parts suppliers' certification cost, increasing the penalty cost of the supplier who provides the auto parts that are not certified, and distributing the risk‐loss proportion of manufacturer and supplier properly can encourage auto parts suppliers to obtain the quality certification.