Keywords: game theory, market competition, sustainable manufacturing, decision making, sustainability, green production, dynamic equilibrium, free entry assumption
A game theory model for analysing market competition in sustainable manufacturing industry
As the global awareness and concerns about the environment issues increase, many governments, regulatory organisations and business leaders have begun to call on the manufacturing and business communities to play leading roles in the process of moving the global economy towards sustainability. Fierce market competition and price sensitivity have been big obstacles in the development and growth of sustainable/green production industry. In this study, analyses are conducted between two groups of ordinary and green production sectors which produce a similar type of product with different materials and techniques. We categorise them as green and ordinary companies. A game theoretical model is formulated to analyse the market competition, and obtain the dynamic equilibrium under the free entry assumption. Sensitivity analyses and numerical examples can provide suggestions to assist policy makers, governments, company executives and consumers to make better and rational decisions.