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System Dynamics Model for the Evolutionary Behaviour of Government Enterprises and Consumers in China’s New Energy Vehicle Market

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  • Hongxia Sun

    (Business School, Beijing Technology and Business University, Beijing 100048, China)

  • Yao Wan

    (Business School, Beijing Technology and Business University, Beijing 100048, China)

  • Huirong Lv

    (Business School, Beijing Technology and Business University, Beijing 100048, China)

Abstract

Exhaust pollution and energy crises are worsening worldwide. China has become the largest motor vehicle producer; thus, promoting the use of new energy vehicles (NEVs) in China has important practical significance. In this paper, considering the limited rationality of governments, NEV enterprises and consumers, we study the subsidy policy of the China NEV market using the evolutionary game and system dynamics (SD) methods. First, a tripartite evolutionary game model is developed and the replicator dynamics equations and Jacobian matrix are obtained. A SD simulation of the model was conducted to further clarify the impact of the initial market proportion and three variables used in the model. The results show that the initial market proportion affects the evolution speed but does not affect the evolution result when the three group players all choose a mixed strategy. For governments, they should not hastily cancel price subsidies provided to consumers; rather, they should dynamically adjust the rate of the subsidy decrease and increase the consumers’ extra cost for purchasing fuel vehicles (FVs). NEV enterprises should appropriately increase their investments in the research and development (R&D) of NEVs.

Suggested Citation

  • Hongxia Sun & Yao Wan & Huirong Lv, 2020. "System Dynamics Model for the Evolutionary Behaviour of Government Enterprises and Consumers in China’s New Energy Vehicle Market," Sustainability, MDPI, vol. 12(4), pages 1-21, February.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:4:p:1578-:d:322826
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