Pricing strategies of domestic and imported electric vehicle manufacturers and the design of government subsidy and tariff policies
01 Nov 2020-Transportation Research Part E-logistics and Transportation Review (Pergamon)-Vol. 143, pp 102093
TL;DR: In this article, the authors investigated the optimal pricing strategies of domestic/imported electric vehicle manufacturer and the government's optimal decisions by developing the game-theoretic models and showed that the technology spillover caused by introducing IEVs into domestic markets can affect the profits of electric vehicle manufacturers and government's decisions on subsidies and tariffs.
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.
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TL;DR: In this paper , the authors examined how the use of blockchain technology deters less sustainable products' entry in the cross-border supply chains in which the entrant produces less sustainable product and enters into the incumbent's market.
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.
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TL;DR: In this article , the effect of subsidy and differential taxation on the market penetration of EVs was studied and a non-cooperative game-theoretic approach was used to analyze different models under uniform and differential tax policies with and without subsidy.
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.
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TL;DR: In this article, the authors investigated two types of subsidies: subsidies to the supplier (Mode S) and subsidy to the manufacturers (Mode M) to prevent supply disruption caused by capacity constraints and outside options, the government needs to offer subsidies.
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.
13 citations
TL;DR: In this paper , the authors examined and compared the economic and environmental effectiveness of two low-carbon strategies: BEV cost reduction (BCR) strategy and GV emission reduction (GER) strategy.
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.
13 citations
References
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TL;DR: In this article, the authors describe the role of incentives for promoting BEVs, and determine what incentives are critical for deciding to buy a BEV and what groups of buyers respond to different types of incentives.
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TL;DR: This paper explores different consumer utility driven operations models and highlights the values of blockchain technology supported (BTS) platforms for diamond authentication and certification, and builds models and analytically examines both the traditional retail network operations and the BTS selling platform.
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TL;DR: In this article, the authors study the impact of government subsidies for green technology adoption on the manufacturing industry's response to demand uncertainty and show that an increase in demand uncertainty leads to higher production quantities and lower prices, resulting in lower profits for the supplier.
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TL;DR: Wang et al. as discussed by the authors established theoretical models to explore how data quality problems affect sustainable fashion supply chain operations and proposed a government sponsor scheme as well as an environment taxation waiving scheme to help.
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TL;DR: It is shown that results of social welfare comparison under two market structures depends on unit environmental impact of EV, and a framework for policy makers to find optimal subsidies or optimal price discount rates is developed.
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