In recent years, green product issues have received increasing attention. Both government regulations and consumer behaviors have a strong influence on the product green degree decisions of manufacturers’ products. In order to find how government regulations and individual’s green product purchase behavior affect manufacturers’ green degree decisions and the market evolution characteristics, this paper proposes a multiagent model that considers the interaction among government, consumers, and manufacturers. The simulation results show that, firstly, the product green degree decision-making of manufacturers needs the guidance and regulation of the government. Secondly, product price subsidies are the most effective way to affect the manufacturers’ product green degree decisions. In contrast to giving green cost subsidies to manufacturers, the government employs various publicity means to improve the environmental awareness of consumers is also an effective way to enhance the green degree of manufacturers’ products. Thirdly, there is a “Crowding Out Effect” on the other qualities of manufacturers’ products when manufacturers focus on the green degree of their products.
As the global economy develops and the population increases, the consumption of natural resources around the world is growing at a high-speed rate [
There are three main stakeholders related to the green degree decision-making of products, namely, manufacturers, consumers, and government [
Besides, the price of green products is usually higher than that of ordinary products, which will reduce consumers’ purchase desire to some degree [
To solve these three problems, we use the agent-based modeling approach to study the mechanism of manufacturers’ green degree decisions and analyze the trend of the evolving choices of manufacturers with different green degrees, which is rare in the study of manufacturers’ green decision problems. These are very important for clarifying the macro behavior mechanism of manufacturers’ green degree decision and the market evolution characteristics of green products in different situations. The originalities and features of this work are described below. Firstly, this work focuses on the influences and interactions among consumers, manufacturers, and government on the micro green degree decision of manufacture, which is different from the previous studies concentrating on the relationship between manufacturers and government or manufacturers and consumers. Secondly, apart from considering the impact of a product’s multiple attributes (price, green degree, quality, etc.), this work also considers the characteristics of agent purchasing behavior, like the customers’ purchasing power, their environmental preference differentiation, the influence of interaction on customers’ purchase decisions in online social networks, the government’s subsidies and penalties, and the competition and learning behaviors among manufacturers. Consequently, the model we develop in this work is closer to the real market. Thirdly, this study gives an observable evolution of the product’s green degree in different scenarios like different consumers’ environmental awareness and analyzes various market indicators such as the average product green degree, average product green degree, and average manufacturer profits.
The studies of manufacture’s decision on green products could be classified into two aspects: the influence of market and consumer attributes and how to decide in the supply chain environment. On the subject of the market and consumer attributes, Liu et al. [
With reference to how to make decisions on green products in a supply chain environment, Ghosh and Shah [
Consumers’ green product purchasing behaviors have mainly been studied in consumer demands, preferences, purchasing power, etc. Olson [
In addition, many studies have identified consumer interaction as an important factor in influencing consumer purchases of green products. Lin et al. [
The Porter hypothesis first proposed that environmental supervision can promote green innovation in manufacturers under appropriate conditions [
To sum up, the existing literature has conducted a lot of studies on the manufacture’s decision on green products, which has laid a good foundation for this paper. However, most of the studies focus on the decision problems in a single enterprise or a single supply chain under the influence of different factors and less on the group behavior of green product decisions. In fact, when manufacturers are competing in the market, they are not only influenced by partners in the supply chain, but also by their competitors in the market. Furthermore, consumers’ green purchasing behavior is not only related to their characteristics but also influenced by their interactions. In fact, consumers are in social networks, and their purchasing behavior will be affected by other consumers in the social network. So, the market demand of consumers cannot be portrayed as a result of a linear function of attributes such as product price and quality. Finally, facing the interaction between manufacturers and consumers, the influence of consumer interactions, imitation, and learning among manufacturers, how the government implements their regulatory measures to improve the green degree of products in the market as a whole has not been well explained.
Manufacturers, customers, and the government make up the market system. And it is a complex adaptive system with the characteristics of complex, dynamic, and nonlinear. In this study, we used an agent-based modeling method to build our model. ABM can clarify the evolution law of the nonlinear behavior of the complex system in the real world by setting interaction rules of agents [
Our goal is to find how government regulation and individuals’ green product purchasing behavior affect manufacturers’ green degree decision and market evolution characteristics. Therefore, we developed an ABM simulation model of the green product market, which including government, consumers, and manufacturers. The government, consumers, and manufacturers are connected through products in the market. A schematic illustration of agents’ decision-making and interaction mechanism is shown in Figure
Agents’ decision and interaction mechanism.
As shown in Figure
The government implements some interventions for social welfare [
Similarly, it is assumed that the government develops the product green degree standard
Moreover, the price subsidy is an effective means for the government to guide consumers to buy green products [
Consumers’ social networks in the real world are different from those formed by Internet users [
It is assumed that a consumer only makes one purchase decision and only chooses one product of a manufacturer in a simulation tick. The comprehensive utility function of consumers is developed on the ground of the information collected on the product and the interactions with his friends in the social network. According to the researches of Zhang T. and Zhang D. [
where
The coefficient
where
In the utility function, we assume that the quality of the product consists of green quality and the other quality. The green quality is defined as the overall impact of the multiple green attributes of a manufacturer’s product, which is supposed to represent by green degree
Furthermore, we assume that consumers can estimate their expected price based on their expectations of green degrees and other qualities of products. Therefore,
The next parameter of the utility function is about the consumer agent sensitivity to the “WOM” effect and herd effect [
where
where
Furthermore, it is considered that consumers do not only compare the total utility of the product to decide whether to buy or not but to have irrational behavior. A common way to describe consumers’ bounded rationality is to use a logit model [
where
According to Equations (
We suppose that there are
It is well known that when a manufacturer produces a product that is greener or of higher other quality, the production process should be more complex and more demanding in terms of technology or materials, so the manufacturer will inevitably have to invest additional costs for these. We divide the cost of per unit product into three parts: the first part is the fixed unit cost; the second part is the extra margin cost caused by green degree, and the third is the additional margin cost caused by the other quality. Then, the cost function of manufacturer
where
We assume that the manufacturer employs the cost-plus pricing method to decide the price of their products. Hence, the product’s price of the
In addition, if we set parameter
Moreover, if a manufacturer’s product green degree is higher than the government’s stipulated standards
Each manufacturer in the market has intelligence and adaptability, and they are learning from each other in the process of competition, especially the manufacturer with the highest profits in their neighborhood. It is supposed that manufacturers do not have technical barriers and production capacity constraints. So, the manufacturer can modify the green degree and the other quality according to their profits without additional costs of production adjustment.
The manufacturer
There are five steps for a manufacturers’ updating its green degree and the other quality. The five steps are described as follows:
There are
Calculating manufacturer
When the current manufacture’s profits
Setting a distance threshold
where
where
If
Return to step 2, when every manufacturer has been updated.
We suppose that there are 40 manufacturer agents and 30,000 consumer agents in a particular market. To obtain the simulation results, we set the used parameters’ initial values that are shown in Table
The parameters and variables’ initial value in the model.
Parameters | Explanation | Range | Distribution |
---|---|---|---|
Number of consumers | 30,000 | Constant | |
Number of manufacturers | 40 | Constant | |
Green degree of manufacturer | [0, 100] | The initial value follows a uniform distribution | |
Standard for manufacturers’ product entering the market. | 30 | Constant | |
Green degree requirement for subsidy application | 70 | Constant | |
Government sampling rate | 0.3 | Constant | |
Government’s penalty coefficient | 2000 | Constant | |
Government’s cost subsidy coefficient | 0.5 | Constant | |
Government’s price subsidy coefficient | 0.08 | Constant | |
The other quality of manufacturer | [20, 100] | The initial value follows a uniform distribution | |
Environmental awareness | [0.5, 2] | Uniform distribution | |
Consumer’s price-sensitive parameters | [1, 20] | Uniform distribution | |
Consumer’s green degree sensitive parameters | [0.4, 0.6] | Uniform distribution | |
Consumer’s other quality sensitive parameters | [0.4, 0.6] | Uniform distribution | |
Consumer’s purchasing power | Normal distribution | ||
Regression coefficient of purchasing power | 0.75 | Constant | |
Consumers’ cost coefficient of product green degree and the other quality | 1.5 | Constant | |
Consumer’s fixed expectation of product green degree and the other quality | -13.54 | Constant | |
Consumer’s sensitivity parameter to his friends’ influence | (0, 1.5) | Uniform distribution | |
Regular unit cost of manufacture | [3, 10] | Uniform distribution | |
The cost coefficient associating with the green degree | 0.03 | Constant | |
The cost coefficient associating with the other quality | 0.03 | Constant | |
Manufacture’s profit margins | [0.1, 0.3] | Uniform distribution | |
Random number | [0, 1] | Uniform distribution | |
Manufacture’s leaning ability of green degree | [0.1, 0.5] | Uniform distribution | |
Manufacture’s leaning ability of the other quality | [0.1, 0.5] | Uniform distribution | |
Distance threshold | 15 | Constant |
On the basis of additional guidance and regulation strategies of the government, four different scenarios are constructed. Scenario 1 assumes that the government does not interfere with manufacturers’ production and consumer’s purchasing price. Scenario 2 supposes that consumer environmental awareness is increased. Scenario 3 supposes that the government subsidizes the costs of manufacturers whose products are greener than the subsidized standard and penalizes the manufacturers whose products are lower than the market entry standard in the form of sampling. Scenario 4 assumes that the government subsidizes the price of products above the specified standard. The four scenarios’ parameters’ changes are shown in Tables
The parameters’ change of different scenarios.
Scenarios | Parameters change |
---|---|
Scenario 1 | |
Scenario 2 | |
Scenario 3 | |
Scenario 4 |
To facilitate the analysis, we classify manufacturers into three categories: those whose products’ green degree is lower than government enter standard
The definitions of indicators.
Indicators | Definitions |
---|---|
Number of LGDM in the market | Number of manufacturers whose product green degree is lower than government enter standard |
Number of MGDM in the market | Number of manufacturers whose product green degree is between |
Number of HGDM in the market | Number of manufacturers whose product green degree is larger than |
Average product green degree of all manufacturers | |
Market share of LGDM | |
Market share of MGDM | |
Market share of HGDM | |
Average product other quality of manufacturers | |
Average profit of manufacturers |
We executed the ABM model in Python 3.7.1 and carried out the experiments in four scenarios. Then, we compute the value of the indicators and analyze them in the next section.
The quantity change of three kinds of manufacturers’ numbers can directly show the modifications of manufacturers’ production behavior. The numbers of LGDM, MGDM, and HGDM in the four scenarios are shown in Figure
Evolutions of the three kinds of manufacturers’ numbers under four scenarios.
Scenario 1
Scenario 2
Scenario 3
Scenario 4
In analyzing the number of LGDM, MGDM, and HGDM, we get two observations. Firstly, manufacturers’ green production behavior needs government guidance and regulation, and appropriate policies and measures have effective impacts on the manufacturers’ decisions of green degree. Secondly, the government’s green cost subsidy and low green degree punishment and increasing consumer awareness of the environment could increase the number of MGDN, but they could not have a significant impact on HGDM manufacturer, while the government’s product price subsidy has an essential impact on the number of HGDM manufacturers.
In Figure
Evolutions of average products’ green degree of the three types of manufacturers.
Consumers are the focus of market competition. Consumers’ preferences are heterogeneous (this study shows the heterogeneity of consumer price preference, environmental awareness, and quality preference). Some manufacturers win a large number of consumers and occupy a high market share by positioning their product appropriately on price, green degree, and the other quality. Figure
Evolutions of the market share of three types of manufacturers in four scenarios.
Scenario 1
Scenario 2
Scenario 3
Scenario 4
Through the above analysis, it can be concluded that the distribution of the market share of the three types of manufacturers is different with different guidance and regulation strategies of the government. When consumers’ environmental awareness is enhanced, and the government punishes LGDM enterprises, gives green cost subsidies to manufacturers with a high green degree, most of the market share is obtained by MGDM manufacturers. When the government subsidizes the price of products, the market share is occupied by HGDM manufacture.
In Figure
Evolutions of average products’ other quality of the three types of manufacturers.
Therefore, it can be concluded that manufacturers would learn to modify the other quality of their products to increase the profits in a competitive market. Second, there may be a “Crowding Out Effect” on the other qualities of manufacturers’ products when they focus on the green degree of its products. This “Crowding Out Effect” is significant when consumers are more environmentally conscious in the four scenarios. When the government subsidizes the green cost of a manufacturer whose green degree is larger than a stander and punishes the manufacturer whose green degree is smaller than the environmental access standards, it is less significant; subsidizing the price of the product basically does not have this effect.
The three types of manufacturers’ average profits of the four scenarios are presented in Figure
Evolutions of the average profits of the three types of manufacturers.
The above analysis indicates that government green cost subsidies and punishment of low green degree manufacturers can produce good results, but they will affect the stability of manufacturers’ profit and the market. The government’s price subsidies and increasing consumers’ environmental awareness can improve the average profit level of the manufacturers while maintaining market stability.
It is crucial to clear up the evolving trends of product green degree in the market and its influence upon the manufacturers’ competitive performance in different scenarios. To help the government and manufacturers make reasonable decisions, we construct an agent-based model to study the green production behavior of manufacture, which considers the interactions of government, consumer, and government.
The results of the simulations provide three conclusions, which could be summarized as follows: firstly, the green product production behavior of the manufacturer needs the guidance and regulation of the government. Secondly, product price subsidies are the most effective means to affect the green degree of the products; comparing with giving green cost subsidies to manufacturers, the government employs various publicity means to improve the environmental awareness of consumers is also an effective way to improve the green degree of manufacturers’ products. Thirdly, there is a “Crowding Out Effect” on the other qualities of manufacturers’ products when manufacturers focus on the green degree of their products.
In light of the above findings, we suggest the as following insights for the government when developing policies about facilitating the production of green products. Firstly, the government can improve the environmental awareness of consumers and cultivate their green consumption habits by enhancing environmental protection publicity or subsidizing green products. In this way, firms have an incentive to produce green products, because market demand preference will stimulate manufacturers to make green production and increase their market share. Secondly, when the government subsidizes green products, it can choose to subsidize the price of products to consumers as a more efficient way than subsidizing the cost of manufacturers. In addition, the government should also pay active attention to other qualities of green products. When the government conducts green product subsidies, it will cause “Crowding Out Effect” on other qualities, which will cause a loss of consumer welfare.
In addition, to facilitate the study, this work only considers the government and consumers who have a more significant effect on the manufacturers’ product green degree decisions. In reality, investors and nongovernmental environmental organizations will also affect the green product production behavior of enterprises. In further research, we can add the above subjects to the model, enrich, and improve the model, so that it can reflect the complex reality.
The simulation model and experimental data used to support the findings of this study are available from the corresponding author upon request.
The authors declare that they have no conflicts of interest.
This work is supported by the National Social Science Foundation of China, grant number 20BGL047.