Yue Cao

Bio: Yue Cao is an academic researcher from Northeastern University (China). The author has contributed to research in topics: Economic surplus & Tariff. The author has an hindex of 1, co-authored 1 publications receiving 3 citations.

Pricing strategies of domestic and imported electric vehicle manufacturers and the design of government subsidy and tariff policies

Abstract: This paper investigates the optimal pricing strategies of domestic/imported electric vehicle manufacturer and the government’s optimal decisions by developing the game-theoretic models. The results show that the technology spillover caused by introducing IEVs into domestic markets can affect the profits of electric vehicle manufacturers and the government’s decisions on subsidies and tariffs. In addition, implementing the subsidy and tariff policies can help to improve the profit of the domestic electric vehicle manufacturer and the social welfare. Moreover, when the degree of technology spillover is relatively large, implementing the subsidy and tariff policies can also help to improve the consumer surplus.

Adopting blockchain technology to block less sustainable products’ entry in global trade

Abstract: In this study, we examine how the use of blockchain technology deters less sustainable products’ entry (LSPE) in the cross-border supply chains in which the entrant produces less sustainable products and enters into the incumbent’s market. We identify that when the blockchain adoption cost exceeds a threshold, the entry can be blocked by mandatory blockchain adoption and the incumbent enjoys the monopoly position; when the blockchain adoption cost falls into an intermediate range, deterrence needs not only the use of blockchain technology but also price distortion by the incumbent; when the blockchain adoption cost is sufficiently low, the incumbent must compete with the entrant because blockchain technology is no longer effective for deterrence. Moreover, we examine how government intervention (tariff or subsidy) affects LSPE and find that both tariff and subsidy schemes can enhance the value of adopting blockchain technology to prevent LSPE. If the blockchain adoption cost is moderate, then levying tariffs on LSPE can achieve an economic and environment-dominating outcome, but the subsidy scheme cannot. Our findings provide managerial insights for cross-border supply chain managers and offer guidance to policy makers who design trade policies.

Design and selection of government policies for electric vehicles adoption: A global perspective

Abstract: • Study the effect of of subsidy and differential taxation schemes on the market penetration of EVs. • The government maximizes social welfare by deciding optimal incentive schemes. • Levying tax on gasoline vehicles (GV) without subsidy to the manufacturer minimizes the overall environmental impact. • In contrast, levying the same tax for both types of vehicles without subsidy generates the maximum environmental impact. Regardless of increased attention in electric vehicles (EV) market expansion, the actual penetration of EVs remains low globally. Almost all major OEMs have announced investment plans to ensure that EVs constitute a major, if not complete, chunk of their product portfolios. On their part, governments worldwide (e.g., China, Poland, India, USA, etc.) have used various policy measures to facilitate EV adoption. In this paper, we study how incentives offered in terms of subsidy and differential taxation schemes could increase the market penetration of EVs. We analyze different models under uniform and differential taxation policies with and without subsidy, using a non-cooperative game-theoretic approach. Our analysis reveals that the government can follow any of the three tax-subsidy mixes that could maximize social welfare, i.e., differential taxation with and without subsidy, and identical tax with a subsidy. Surprisingly, the manufacturer's profit, the government's income, and consumer surplus for these three models are also the same and are better than the other two models depending on the consumer's green sensitivity, i.e., for higher green sensitivity, these three models can provide a win–win outcome. From an environmental perspective, levying tax on gasoline vehicles (GV) without subsidy to the manufacturer minimizes the overall environmental impact. In contrast, levying the same tax for both types of vehicles without subsidy to the manufacturer generates the maximum overall environmental impact. Furthermore, an increase in the unit environmental impact of vehicles attracts higher taxes. We portray that the increase in the cost-difference between EV and GV increases GV demand and is detrimental for EV acceptance. In addition, multifaceted insights are drawn for manufacturers and policymakers to envisage electric mobility. We extend our models and show that our main results hold under the implementation of mandate on EV manufacturers under subsidy and non-subsidy model, and inclusion of hassle cost for consumers due to lack of infrastructure in terms of charging facilities and maintenance.

Government subsidies for preventing supply disruption when the supplier has an outside option under competition

Abstract: To prevent supply a disruption caused by capacity constraints and outside options, the government needs to offer subsidies. The following two types of subsidies are investigated: subsidies to the supplier (Mode S) and subsidies to the manufacturers (Mode M). Our analysis reveals that government subsidy strategies depend on the size of the external price and the capacity. Interestingly, Mode M (manufacturer subsidy) is superior to Mode S (supplier subsidy). Moreover, subsidizing both the supplier and manufacturers simultaneously is not superior to a single subsidy mode. Furthermore, the social welfare in the competitive case is not worse than that in the monopoly case under certain conditions. However, neither subsidy mode can prevent supply disruptions under scenarios of higher intensity of competition.

Cost-reducing strategy or emission-reducing strategy? The choice of low-carbon decisions under price threshold subsidy

Abstract: Different from the traditional subsidy scheme previously studied, we explore the incentive of price threshold subsidy scheme (PTS) for the sustainable operation of automobile enterprises. A product differential model on gasoline vehicles (GVs) and battery energy vehicles (BEVs) is analyzed within a PTS mechanism. We examine and compare the economic and environmental effectiveness of two low-carbon strategies: BEV cost reduction (BCR) strategy and GV emission reduction (GER) strategy. The results indicate that the PTS forces the manufacturer to deploy three different pricing decisions based on BEV production costs. Raising the price threshold is a positive sign for the manufacturer. However, when the government implements the PTS policy mainly to increase BEV sales, blindly raising the price threshold under the medium-cost case will be counterproductive. Besides, the active BCR strategy can bring significant economic and environmental benefits compared to the strategy without cost investment. We unexpectedly find that high consumer environmental concerns trigger BCR strategy to generate greater cost advantages. But the BCR strategy is not always the optimal choice. When the initial carbon emissions of GV are low and the emission reduction efficiency is high enough, the GER strategy is more effective than the BCR strategy in terms of profit and total carbon emissions. And this advantage expands with the increase in BEV cost and emission-reducing subsidy.