The Game Analysis among Governments, the Public and Green Smart Supply Chain Enterprises in Necessity Purchase and Supply during COVID-19 Pandemic

Abstract

During the COVID-19 pandemic, panic buying, price inflation, and the pollution of production processes led to economic and social unrest. In response to the current situation, the current research takes less account of the subjective perception of public panic buying and the lack of reference to the reality of effective governance. First, this paper uses prospect theory to portray the public’s perceived value of goods in panic buying and non-panic buying situations. Then, drawing on the experience of effective governance in China, a tripartite evolutionary game model of local government, the public and green smart supply chain enterprises is constructed under the reward and punishment mechanism of the central government. Then, this paper analyzes the strategic choices of each game player and the stability of the system equilibrium. The structure of the study suggests the following. (1) Improving local government subsidies and penalties, the cost of positive response and the probability of response can lead to an evolutionary direction where the public chooses not to panic buy and green smart supply chain enterprises choose to ensure a balance between supply and demand and increase pollution control in the production process. (2) Our study yields three effective combinations of evolutionary strategies, of which an ideal combination of evolutionary strategies exists. Non-ideal evolutionary strategy combinations can occur due to improper incentives and penalties of local governments and misallocation of limited resources. However, we find four paths that can transform the non-ideal evolutionary strategy combination into an ideal evolutionary strategy combination. (3) The central government’s reward and punishment mechanism is an important tool to stabilize the tripartite strategy, but the central government cannot achieve effective governance by replacing incentives with punishment.