Abstract: The emergence of green emerging markets has shifted the competitive environment from the traditional single market to a multi-market, multi-resource direction, posing new challenges to both corporate product line expansion strategies and relevant government regulation policies. This study builds a game model based on consumer value theory and market segmentation theory to comprehensively analyse the interplay among three major forces (consumers, firms and government) in today’s green markets, and to investigate how government regulation policies moderate firms’ product line expansion decisions. The results show that: differences in fixed costs across industries affect firms’ choice of product line expansion strategies, and for industries with higher fixed costs, firms need to abandon traditional markets in time to reduce the risk of losing out on competition in the transition; stricter government environmental regulation has a limited incentive to stimulate green innovation in the market and needs to be regulated according to the degree of market development. The findings provide useful managerial insights into the strategic choices of firms in green transitions and in-depth discussions on the moderating impact of environmental regulation enforcement.

Key words: green market, product strategy, game model, environmental regulation