Automobile manufacturers’ strategic choice in applying green practices: joint application of evolutionary game theory and fuzzy rule-based approach

Abstract

Satisfying the end-of-life vehicle (ELV) legislations is essential for business activities in some markets. However, with the lack of similar regulations for the treatment of ELV, automotive manufacturers follow different green practices. These practices can be a complex task such as an eco-design strategy or issuing a guideline or manual for the end-of-life phase of the product. Each of these practices also has different impacts on the other players in the market. Several factors contribute to manufacturers’ gain as a result of applying green practices. The uncertainties in these features and the absence of data availability raise the difficulty in the manufacturers’ profit estimation. This paper proposes a new approach to analysing automotive manufacturers’ strategic choice in applying ELV practices considering the competitive advantages of performing these practices and the interaction between players. A joint application of evolutionary game theory and fuzzy rule-based approach is proposed to analyse the strategic behaviour of automotive manufacturers. The proposed model provides a simulation environment for testing the interaction of the different market factors and players’ action. The experimental design highlights the validity of the model and its implications. The result reveals that when we have two populations of players including the market leader in recycling initiatives and market reader; the market elements such as ‘elasticity of demand to price’ and ‘loyalty of consumers to market leader’ play an essential role in determining the stable strategy of the game.

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