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

Transitioning carriers to low-emission technologies requires huge investment, and subsidies have proven to be efficient tools in overcoming cost barriers. In this study, game-theoretic models were formulated to study the impact of subsidies on carbon emissions reduction with green shippers in a price-competitive environment. Equilibrium solutions for three scenarios were derived through model analysis, followed by numerical analyses. The results indicate the following: (1) Government subsidies are effective and advantageous for decarbonization with carrier competition but will lower service prices, profits, and social welfare. (2) Intensified price competition leads to increases in carbon emissions, 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. These findings provide valuable managerial insights for both the government and shipping companies in promoting a more sustainable environment.