Evolutionary game theory analysis of the role of government regulation on the rural energy efficiency construction

Abstract

Energy efficiency construction in rural areas is of great significance to society. There will be a lot of social benefits and economic positive externalities. Because of positive externalities, the energy-saving products' cost is higher than the traditional products' cost. The famers have a very low income, and they are price-sensitive. There is always a market failure. According to the consumer features of the farmers summarized, the asymmetric 2×2 noncooperative repeated game between the government and the farmers is analyzed through the method of evolutionary game theory. The game model is used to research the government regulatory role for promoting the energy-efficient construction after the implementation of incentives. Then, the game equilibrium is obtained which is evolutionary stable strategy (ESS) and is uncertain and dependent on the initial states of the game. According to the game conclusion, the game equilibrium and parameters of the game were given. The government that is dominant in the game and with higher level of rationality should guide the farmers with a lower level of rationality to reach the Pareto optimal Nash equilibrium. © Springer-Verlag Berlin Heidelberg 2014.