For the sustainable performance of the carbon reduction labeling policies under an evolutionary game simulation

•We propose an evolutionary game model in the implementation of a carbon reduction labeling scheme.•System dynamics is used for the game simulation.•Different game scenarios are generated to reflect the variation of the enterprises' responses.•Individual and combined interventions of incentive policies are examined.

The study proposes an evolutionary game model to investigate the possible responses of enterprises to incentive policies related to the implementation of a carbon reduction labeling scheme, such as a direct subsidy and preferential taxation rates. System dynamics is applied to simulate the created game model and we analyze two scenarios, namely the individual and combined intervention of incentive policies. A case study of China's air conditioner enterprises is then examined, with the simulation results highlighting that both a direct subsidy and preferential taxation positively influence the implementation of the carbon reduction labeling scheme. In particular, the combination of these two incentive policies is efficient compared with individual policy making. Finally, the limitations of the game theoretical analysis are discussed and future research directions are provided.