Pricing strategy and coordination of automobile manufacturers based on government intervention and carbon emission reduction

Junhai Ma, Yaming Hou, Zongxian Wang and Wenhui Yang

Energy Policy, 2021, vol. 148, issue PA

Abstract: The game model of the duopoly automobile manufacturers established in this paper takes the carbon emission reduction policy constraint as the research background, and discusses how the electric vehicle and the fuel vehicle compete in the performance of the product in the delay pricing decision under the strategic consumer, which is seldom considered in other related studies. The government gives electric vehicle consumers preferential policies on consumption subsidies and exemption from consumption tax. Additionally, he levies consumption tax and sales carbon tax from fuel vehicle consumers and manufacturers, respectively. The government also supports the development of electric vehicles by establishing charging piles. This paper cast light on how different market structures and different adjusting speed of price work on the vehicle manufacturers' operation and the system's stability. At first, we consider a single period game to derive the optimal solutions, finding that government intervention policies can maximize the social welfare. Additionally, the impacts of tax and subsidy on social welfare are different when fuel vehicle manufacturer is leader. Then, we consider a repeated game where players make decision based on bounded rationality. We compare the optimal solutions and give a numerical simulation for the dynamic process. For fuel vehicle manufacturer, too much energy consumption triggers high emission tax and also lowers consumers' surplus. We also find that fuel vehicle manufacturer acting as the leader enables the system to be more stable than the scenario in the current vehicle industry condition, where the electric vehicle manufacturer acts as the leader.

Keywords: Pricing strategy; Electric vehicle; Fuel vehicle; Carbon emission; Dynamic complexity research (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:148:y:2021:i:pa:s0301421520306303

DOI: 10.1016/j.enpol.2020.111919

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