Alternative governmental carbon policies on populations of green and non-green supply chains in a competitive market

As a severe challenge to governments, air pollution threatens many lives annually. This paper develops an evolutionary game theory model for supply chains (SCs) to encourage firms to reduce carbon emissions. A government dictates three carbon policies: carbon cap, carbon tax, and cap and trade. We construct six scenarios according to the carbon regulations and SC functions (i.e., centralized versus decentralized ones). First, the profit function of SCs that are the input of the game matrix is formulated, and optimal final prices and quantities of products are obtained. Then, an evolutionary game-theoretic model is formulated to analyze the behavior of populations by obtaining the evolutionary stable strategy under each scenario. In addition, three models of government intervention are presented, considering the cost associated with environmental pollution and government net revenue. Finally, a case study of motorcycle production dissects the results. The findings demonstrate that cap and trade can be introduced as an incentive policy since it encourages SCs to adopt green strategies and improves their profit. A carbon tax policy also succeeds in pressuring SCs to apply green strategies. However, a carbon cap policy fails in forcing SCs to adopt green strategies. Finally, it is concluded that decentralized supply chains (DSCs) handle high tax rates better than centralized supply chains (CSCs).