Using System Dynamics and Game Model to Estimate Optimal Subsidy in Shore Power Technology

Abstract

To cope with severe environmental problems, the government has implemented strict emission control policies, and promoted the use of technology such as shore power (SP) in the form of subsidies. The SP providers of the shipping lines like the ports provide better SP services to shipping lines by improving its reliability, such as safety and standardization. This paper examines a two-echelon maritime supply chain consisting of a port and a shipping line under government green subsidy and explores the subsidy mechanism and its impact. The optimal government subsidy intensity and subsidy reduction point are confirmed using game theory. The system dynamics (SD) method is used to analyze the influence and evolution of practical problems such as government subsidy efficiency, information asymmetry, and inconsistent decision-making periods under multiple games utilizing the optimal response function. The paper shows that both shipper SP preference and decision period affect the SP reliability. When the shipper's preference is high, the actual shipper's subsidies and government subsidies are inefficient. Information asymmetry borne by ports and shipping line causes considerable fluctuations in the game and does not affect the actual subsidies received by shippers. Also, shipping line downstream of the supply chain are more affected by it. This paper offers insight for the government to formulate subsidy policies in the maritime supply chain.