The Evolutionary Analysis of Agricultural Production Transaction Under The Price Subsidy Policy

The Evolutionary Analysis of Agricultural Production Transaction Under The Price Subsidy Policy

Jianhua Huang (Fuzhou University, Fuzhou, China), YanDang Chen (Fuzhou University, Fuzhou, China) and Shan He (Southwest Jiaotong University, Chengdu, China)
DOI: 10.4018/IJISSCM.2020010104

Abstract

The scattered and small-scale production mode together with asymmetric business information results in the Chinese peasants' weak position in the agricultural supply chain. Chinese government has implemented some effective measures to safeguard the peasants' benefits. By establishing a tripartite evolutionary game model among the peasants, agricultural products dealers and government under the policy of price subsidy, the effects of social benefits, the size of the penalty and the transaction volume on the evolutionary stable strategy is discussed. A simulation instance is also given to demonstrate the evolutionary game model. The results shows that the probability of government regulation is not only related to the social benefits of regulation, but also affected by the transaction volume of agricultural products, the peasants benefits can be protected effectively by the price subsidy policy and the probability of the agricultural products dealers choosing fraud strategy declines with the increase of penalty and increases with the transaction volume of agricultural products.
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Literature Review

The studies related to the game of agricultural products trading have been mainly carried out from the following several perspectives.

Firstly, some articles addressed the farmers' weak position in the game as well as how to improve their defects. For example, Li and Zhao (2008) researched the game between peasants and village committee in the process of the reform of farmland property right system and found that eliminating the inconsistent preference in peasants may help to improve the peasants’ weak position in the game. Tu and Leng (2010) discovered that in the process of cooperation between agricultural enterprises and farmers, farmers have to face the risk of agricultural enterprises violating contracts. They also found that the future of agricultural products can help reduce the default behaviors of enterprises. Liu, Qiao and Liu (2012) and Liu (2011) studied the game between the supermarket and the farmer cooperative by using the Stackelberg model and the cooperative game model, and found that cooperation is better than confrontation in reducing the cost and loss in the circulation of agricultural products. Similarly, Blandon, Henson and Islam (2009) thought that as a typical agricultural products circulation mode, “farmer-supermarket direct-purchase” is conducive to decreasing cost and reducing the loss of agriculture products. Also, Chen (2013) and Rajesh (2014) sustain the coordination among peasants would help to increase mutual benefits and reduce business risk. Cao and Zhang (2010), Hui and Bao (2013), and Liu (2010) analyzed the results of the evolutionary game between the peasants and the insurance company, and revealed that, due to the weak awareness of farmers' insurance, insurance companies tend to provide fewer types of insurance.

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