Government subsidy strategy and ship green upgrading decision in coal water transportation

In the coal water transportation industry, governments of multiple countries provide subsidies to shipping companies or shippers to promote the companies to upgrade their ships. However, it is unclear whether the shipping companies are bound to upgrade their ships under the government subsidy. To this end, this work focuses on a market that includes the government, a shipping company and a shipper with transportation demand, and investigates the government subsidy strategy and the company's decision on ship green upgrading. The results show that the decisions of the government and the company are related to operating cost after upgrading the ships, government's subsidy coefficient, and cost coefficient of upgrading the ships. When the operating cost is high, the government will not subsidize the company or the shipper if the cost coefficient is high and the subsidy coefficient is low. When the operating cost is low (high), the government prefers to subsidize the company and the company is willing to upgrade its ships if the subsidy coefficient is high (high enough). When the operating cost is moderate, or it is high, and the two coefficients are low or the subsidy coefficient is moderate, the optimal decision is for the government to subsidize the shipper and for the company to upgrade the ships. These results help the government and the company make appropriate decisions under specific conditions.