Scandinavian Working Papers in Economics

Working Papers,
Copenhagen Business School, Department of Economics

No 18-2021: Developing Hydrogen Infrastructure and Demand: An Evolutionary Game and the Case of China

Tian Zhao, Zhixin Liu and Tooraj Jamasb ()
Additional contact information
Tian Zhao: School of Economics and Management, Beihang University
Zhixin Liu: School of Economics and Management, Beihang University
Tooraj Jamasb: Department of Economics, Copenhagen Business School, Postal: Copenhagen Business School, Department of Economics, Porcelaenshaven 16 A. 1. floor, DK-2000 Frederiksberg, Denmark

Abstract: Diffusion of hydrogen refueling stations (HRS) is key to promotion of hydrogen vehicles. In this paper, we explore the nexus between critical stakeholders in the hydrogen industry from a game perspective. We investigate the proposed policy for promotion of hydrogen vehicles in China. We model the three main actors in hydrogen infrastructure development, i.e. public sectors, private investors, and consumers. The tripartite evolutionary game analyzes the interactive policy process of subsidy provision, infrastructure investment, and fuel consumption. We then examine the evolutionary stable strategy (ESS) of the system. We propose a policy mechanism for how to set values of key parameters to promote active cooperation of the three actors in HRS diffusion. A numerical simulation validates the solution of the game and sensitivity analyses of initial probabilities and key parameters. We find that boosting initial willingness of actors to choose cooperative hydrogen strategies is beneficial to lead the game system to the ideal consequence. We offer some recommendations including establishing regulation standards for the construction of HRS, increasing financial incentives to each actor and decreasing the cost of HRS and retail price of hydrogen.

Keywords: Hydrogen infrastructure; Evolutionary game; Numerical simulation; China

JEL-codes: C73; Q42; Q48; R42

Language: English

30 pages, November 21, 2021

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