China's regional industrial transfer behavior based on evolutionary game theory

Abstract

With rapid development of China’s economics, the regional industrial transfer behavior becomes more active. Different from international industrial transfer, the main body of China’s regional industrial transfer also includes government participation not just enterprise. As such, this paper discusses the evolutionary mechanism of regional industrial transfer in Chinese context, based on sustainable development under the transformation of industry upgrading. This paper first extended a basic dynamic evolutionary game model of regional industrial transfer behavior and analysis the evolutionarily stable strategies, then further developed an evolutionary game model considering the government’s incentives, numerical examples and simulation also provided evidence to theoretical results. The results show that the evolutionary stable strategies are affected by the initial input costs, excess profits and the ratio of profit distribution. Moreover, the system will evolve to different equilibriums under different boundary conditions. Furthermore, more effective incentive mechanism of government can increase the probability of the implementation of regional industrial transfer.

Keywords:

• Evolutionary game
• Regional industrial transfer
• Bounded rationality
• Evolutionary stable strategy