Competition between Green and Non-Green Travel Companies: The Role of Governmental Subsidies in Green Travel

The problem of carbon emissions in transportation is an increasing concern, and consumers need to be encouraged towards green modes of travel to achieve low-carbon travel. To compete with non-green travel companies, green travel companies have considered implementing expensive green efforts to attract consumers. Decisions on travel prices, the green efforts of green travel companies to maintain their competitiveness, and the role of governmental subsidies in promoting green travel must be thoroughly investigated. To consider travel competitiveness and the role of governmental subsidies that support the increased expenses of green travel, this study defined four different decision-making scenarios. The Nash game model without governmental subsidies and the Stackelberg–Nash game model with governmental subsidies were built and solved to understand the effects on the pricing and green efforts of travel companies. The equilibrium results and the role of governmental subsidies were analyzed theoretically and numerically. The results showed that governmental subsidies could boost green efforts while increasing green and non-green travel prices. The competition between green and non-green travel companies both undermined the role of the governmental subsidies and reduced the green and non-green travel prices. A sufficiently large cost-sharing coefficient from the government caused the green travel demand to be higher than the non-green travel demand.