Overcapacity investment and supervision fluctuation: an evolutionary game approach. Issue 3 (6th February 2020)

• Record Type: Journal Article
• Authors: Ma, Yingying; Zhang, Zaixu; Jang, Jaejin; Qu, Jie
• Is Part Of: Applied economics letters. Volume 27:Issue 3(2020)
• Page Start: 221
• Page End: 227
• Publication Date: 2020-02-06
• Subjects: Overcapacity -- capacity overinvestment -- supervision fluctuation -- evolutionary game theory; Economics -- Periodicals; Economics, Mathematical -- Periodicals; 330
• DOI: 10.1080/13504851.2019.1613486
• Languages: English
• ISSNs: 1350-4851

Abstract

ABSTRACT: The production enterprise's capacity overinvestment and governmental supervision failure often lead to overcapacity. The article builds an evolutionary game model between supervision agencies and production enterprises to explain the supervision fluctuation of overcapacity problem. The analytical solutions are found. Numerical examples are provided to illustrate the evolutionary game process with Dynamo and Matlab. In the long-run, the initial condition and the payoffs are two main factors determine the probability of failed supervision. Apart from single punishment measure, more effective measures need to be taken to address overcapacity efficiently.