Strategic Adoption of Voluntary Environmental Management in Developing Countries: A Tripartite Game Among Government, Producers, and Consumers

ABSTRACT This study examines voluntary environmental management (VEM) as a pathway to green economic transition in developing countries. A tripartite game model is developed to analyze the interactions among producers, government, and consumers under varying levels of environmental policy stringency and environmental awareness. The model's verified through simulations using Vietnam's market data. Results show that pollution penalty, supervision costs, and consumer's environmental awareness are the strongest drivers of VEM. High public awareness and strict enforcement promote green production, while weak regulations and high compliance costs discourage it. Incentive‐based policies have limited effect unless they are aligned with the market and regulatory signals. The simulation also reveals critical thresholds in production, consumption, and government supervision that are necessary to achieve a self‐sustaining green market. By integrating stakeholders' behavioral dynamics, this study advances VEM literature, provides useful policy insights, and a strategic decision‐making framework for resource‐constrained and rapidly transforming economies.