Towards Decarbonization: Sustainable Incentives in a Price-Competitive Maritime Supply Chain with Environmentally-Conscious Shippers

Transitioning to low-emission technologies for carriers needs a huge investment, and subsidies have proven to be efficient tools in overcoming cost barriers. In this paper, we formulate game-theoretical models to study the impact of subsidies on carbon emission reduction with green shippers in a price-competitive environment. Equilibrium solutions for three scenarios are derived and numerical analysis is conducted. Results indicate that (1) Government subsidies are effective and advantageous for decarbonization with carriers’ competition, but will lower service prices, profits and social welfare; (2) Intensified price competition leads to the increase in carbon emission, service prices and social welfare, while decreasing demands and profits in some scenarios; (3) Shippers’ green preferences have a positive effect on carbon emission reduction, profits and social welfare. Our findings can provide valuable managerial insights for both the government and shipping companies in promoting a more sustainable environment.