Effects of Dual Credit Policy and Consumer Preferences on Production Decisions in Automobile Supply Chain

Liangui Peng, Ying Li and Hui Yu
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Liangui Peng: School of Business, East China University of Science and Technology, Shanghai 200237, China
Ying Li: School of Business, East China University of Science and Technology, Shanghai 200237, China
Hui Yu: School of Business, East China University of Science and Technology, Shanghai 200237, China

Sustainability, 2021, vol. 13, issue 11, 1-19

Abstract: New energy vehicles have a significant advantage in energy saving and environmental pollution reduction in the transportation industry; however, they are still at a disadvantage in the market competition. The Chinese government has introduced lots of policy measures to promote the mass adoption of new energy vehicles (NEVs), specifically the dual credit policy. Moreover, consumer’s preferences are vital factors in their purchase decision making. This study focuses on the production decisions of automobile manufacturers under the decentralized and centralized supply chain, considering the factors of both consumer preferences and dual credit policy. First, under the centralized decision mode, higher demand drives the manufacturer to expand production; however, retailers’ profits are harmed. With the increase in consumers’ environmental preference and cognition of endurance ability, market pricing and demand increase under the decentralized decision mode. The cross effects of preferences bring more profits for manufacturers and retailers. Second, the difference in prices and profits widens, under the two decision modes, as increases in consumer preferences’ value. When consumers have higher environmental preferences, manufacturers and retailers should increase the new energy vehicle pricing. Otherwise, they should decrease pricing to increase the market penetration ratio. In addition, the impacts of one preference on the profit difference are related to the other preference.

Keywords: production decisions; automobile supply chain; dual credit policy; dual consumer preferences (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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