IDEAS home Printed from https://ideas.repec.org/a/eee/transe/v143y2020ics1366554520307420.html
   My bibliography  Save this article

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

Author

Listed:
  • Fan, Zhi-Ping
  • Cao, Yue
  • Huang, Chun-Yong
  • Li, Yongli

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.

Suggested Citation

  • Fan, Zhi-Ping & Cao, Yue & Huang, Chun-Yong & Li, Yongli, 2020. "Pricing strategies of domestic and imported electric vehicle manufacturers and the design of government subsidy and tariff policies," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 143(C).
    • Handle: RePEc:eee:transe:v:143:y:2020:i:c:s1366554520307420
    DOI: 10.1016/j.tre.2020.102093
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1366554520307420
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.tre.2020.102093?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Yuan Shao & Xudong Deng & Qiankai Qing & Yajuan Wang, 2018. "Optimal Battery Recycling Strategy for Electric Vehicle under Government Subsidy in China," Sustainability, MDPI, vol. 10(12), pages 1-18, December.
    2. Shao, Lulu & Yang, Jun & Zhang, Min, 2017. "Subsidy scheme or price discount scheme? Mass adoption of electric vehicles under different market structures," European Journal of Operational Research, Elsevier, vol. 262(3), pages 1181-1195.
    3. Jiayi Joey Yu & Christopher S. Tang & Zuo-Jun Max Shen, 2018. "Improving Consumer Welfare and Manufacturer Profit via Government Subsidy Programs: Subsidizing Consumers or Manufacturers?," Manufacturing & Service Operations Management, INFORMS, vol. 20(4), pages 752-766, October.
    4. Xiaoxue Zheng & Haiyan Lin & Zhi Liu & Dengfeng Li & Carlos Llopis-Albert & Shouzhen Zeng, 2018. "Manufacturing Decisions and Government Subsidies for Electric Vehicles in China: A Maximal Social Welfare Perspective," Sustainability, MDPI, vol. 10(3), pages 1-28, March.
    5. Niu, Baozhuang & Wang, Yulan & Guo, Pengfei, 2015. "Equilibrium pricing sequence in a co-opetitive supply chain with the ODM as a downstream rival of its OEM," Omega, Elsevier, vol. 57(PB), pages 249-270.
    6. Gu, Huaying & Liu, Zhixue & Qing, Qiankai, 2017. "Optimal electric vehicle production strategy under subsidy and battery recycling," Energy Policy, Elsevier, vol. 109(C), pages 579-589.
    7. Felipe Larrain B. & Andres Rodriguez-Clare, 2000. "Intel: A Case Study of Foreign Direct Investment in Central America," CID Working Papers 58A, Center for International Development at Harvard University.
    8. Knez, Matjaz & Zevnik, Gašper Kozelj & Obrecht, Matevz, 2019. "A review of available chargers for electric vehicles: United States of America, European Union, and Asia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 109(C), pages 284-293.
    9. Tim Josling & Kym Anderson & Andrew Schmitz & Stefan Tangermann, 2010. "Understanding International Trade in Agricultural Products: One Hundred Years of Contributions by Agricultural Economists," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(2), pages 424-446.
    10. Li, Yaoming & Zhang, Qi & Liu, Boyu & McLellan, Benjamin & Gao, Yuan & Tang, Yanyan, 2018. "Substitution effect of New-Energy Vehicle Credit Program and Corporate Average Fuel Consumption Regulation for Green-car Subsidy," Energy, Elsevier, vol. 152(C), pages 223-236.
    11. Jian Huang & Mingming Leng & Liping Liang & Jian Liu, 2013. "Promoting electric automobiles: supply chain analysis under a government’s subsidy incentive scheme," IISE Transactions, Taylor & Francis Journals, vol. 45(8), pages 826-844.
    12. Luo, Chunlin & Leng, Mingming & Huang, Jian & Liang, Liping, 2014. "Supply chain analysis under a price-discount incentive scheme for electric vehicles," European Journal of Operational Research, Elsevier, vol. 235(1), pages 329-333.
    13. Cortés-Murcia, David L. & Prodhon, Caroline & Murat Afsar, H., 2019. "The electric vehicle routing problem with time windows, partial recharges and satellite customers," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 130(C), pages 184-206.
    14. Niu, Baozhuang & Chen, Lei & Zhang, Jie, 2017. "Punishing or subsidizing? Regulation analysis of sustainable fashion procurement strategies," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 107(C), pages 81-96.
    15. Choi, Tsan-Ming & He, Yanyan, 2019. "Peer-to-peer collaborative consumption for fashion products in the sharing economy: Platform operations," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 126(C), pages 49-65.
    16. Choi, Tsan-Ming, 2019. "Blockchain-technology-supported platforms for diamond authentication and certification in luxury supply chains," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 128(C), pages 17-29.
    17. Wang, Ning & Tang, Linhao & Zhang, Wenjian & Guo, Jiahui, 2019. "How to face the challenges caused by the abolishment of subsidies for electric vehicles in China?," Energy, Elsevier, vol. 166(C), pages 359-372.
    18. Yi, Zonggen & Bauer, Peter H., 2016. "Optimization models for placement of an energy-aware electric vehicle charging infrastructure," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 91(C), pages 227-244.
    19. Maxime C. Cohen & Ruben Lobel & Georgia Perakis, 2016. "The Impact of Demand Uncertainty on Consumer Subsidies for Green Technology Adoption," Management Science, INFORMS, vol. 62(5), pages 1235-1258, May.
    20. Kundu, Tanmoy & Sheu, Jiuh-Biing, 2019. "Analyzing the effect of government subsidy on shippers’ mode switching behavior in the Belt and Road strategic context," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 129(C), pages 175-202.
    21. Chang, Yang-Ming & Raza, Mian F., 2018. "Import competition, product quality reversal, and welfare," Economics Letters, Elsevier, vol. 163(C), pages 162-166.
    22. Yan, Qingyou & Yang, Le, 2018. "Optimal licensing in a differentiated Bertrand market under uncertain R&D outcomes and technology spillover," Economic Modelling, Elsevier, vol. 68(C), pages 117-126.
    23. Gu, Xiaoyu & Ieromonachou, Petros & Zhou, Li, 2019. "Subsidising an electric vehicle supply chain with imperfect information," International Journal of Production Economics, Elsevier, vol. 211(C), pages 82-97.
    24. Wang, Ning & Pan, Huizhong & Zheng, Wenhui, 2017. "Assessment of the incentives on electric vehicle promotion in China," Transportation Research Part A: Policy and Practice, Elsevier, vol. 101(C), pages 177-189.
    25. Hafezalkotob, Ashkan, 2017. "Competition of domestic manufacturer and foreign supplier under sustainable development objectives of government," Applied Mathematics and Computation, Elsevier, vol. 292(C), pages 294-308.
    26. Bian, Junsong & Zhao, Xuan, 2020. "Tax or subsidy? An analysis of environmental policies in supply chains with retail competition," European Journal of Operational Research, Elsevier, vol. 283(3), pages 901-914.
    27. Choi, Tsan-Ming & Luo, Suyuan, 2019. "Data quality challenges for sustainable fashion supply chain operations in emerging markets: Roles of blockchain, government sponsors and environment taxes," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 131(C), pages 139-152.
    28. Bigerna, Simona & Wen, Xingang & Hagspiel, Verena & Kort, Peter M., 2019. "Green electricity investments: Environmental target and the optimal subsidy," European Journal of Operational Research, Elsevier, vol. 279(2), pages 635-644.
    29. Jiangfeng Fu & Xiangfeng Chen & Qiying Hu, 2018. "Subsidizing strategies in a sustainable supply chain," Journal of the Operational Research Society, Taylor & Francis Journals, vol. 69(2), pages 283-295, February.
    30. Zhang, Xiang, 2014. "Reference-dependent electric vehicle production strategy considering subsidies and consumer trade-offs," Energy Policy, Elsevier, vol. 67(C), pages 422-430.
    31. Eapen, Alex & Yeo, Jihye & Sasidharan, Subash, 2019. "Finance constraints and technology spillovers from foreign to domestic firms," Economic Modelling, Elsevier, vol. 76(C), pages 50-62.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kuppusamy, Saravanan & Magazine, Michael J. & Rao, Uday, 2023. "Impact of downstream emissions cap-and-trade policy on electric vehicle and clean utility adoption," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 180(C).
    2. Bai, Qingguo & Chen, Jiguang & Xu, Jianteng, 2023. "Energy conservation investment and supply chain structure under cap-and-trade regulation for a green product," Omega, Elsevier, vol. 119(C).
    3. Xiaojiao Qiao & Shimeng Xu & Dan Shi & Xiukun Zhao, 2023. "Data-Driven Sustainable Supply Chain Decision Making in the Presence of Low Carbon Awareness," Sustainability, MDPI, vol. 15(12), pages 1-16, June.
    4. Li, Kunpeng & Wang, Lan, 2023. "Optimal electric vehicle subsidy and pricing decisions with consideration of EV anxiety and EV preference in green and non-green consumers," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 170(C).
    5. Cao, Yifan & Shen, Bin, 2022. "Adopting blockchain technology to block less sustainable products’ entry in global trade," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 161(C).
    6. Srivastava, Abhishek & Kumar, Rajeev Ranjan & Chakraborty, Abhishek & Mateen, Arqum & Narayanamurthy, Gopalakrishnan, 2022. "Design and selection of government policies for electric vehicles adoption: A global perspective," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 161(C).
    7. Gao, Yongling & Leng, Mingming & Zhang, Yaping & Liang, Liping, 2022. "Incentivizing the adoption of electric vehicles in city logistics: Pricing, driving range, and usage decisions under time window policies," International Journal of Production Economics, Elsevier, vol. 245(C).
    8. Guo, Yan & Yu, Xinning & Zhou, Caifeng & Lyu, Gaoyan, 2021. "Government subsidies for preventing supply disruption when the supplier has an outside option under competition," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 147(C).
    9. de Rus, Ginés & Socorro, M. Pilar, 2022. "Subsidies in air transport markets: The economic consequences of choosing the wrong mechanism," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 160(C).
    10. Li, Yina & Liang, Chenchen & Ye, Fei & Zhao, Xiande, 2023. "Designing government subsidy schemes to promote the electric vehicle industry: A system dynamics model perspective," Transportation Research Part A: Policy and Practice, Elsevier, vol. 167(C).
    11. Cheng, Fei & Chen, Tong & Chen, Qiao, 2022. "Cost-reducing strategy or emission-reducing strategy? The choice of low-carbon decisions under price threshold subsidy," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 157(C).
    12. Yi, Yongxi & Zhang, Meng & Zhang, Aoxiang & Li, Yuqiong, 2024. "Can “dual credit” replace “subsidies” successfully? -based on analysis of vehicle supply chain decisions under the digital transformation of technology," Energy Economics, Elsevier, vol. 130(C).
    13. Tang, Juan & Ji, Guan-Qun & Liu, Zhi & Sheu, Jiuh-Biing, 2024. "Electric vehicle battery-charging service and operations managing under different charging station construction modes," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 181(C).
    14. Zhao, Meng & Li, Bin & Ren, Jiali & Hao, Zhihua, 2023. "Competition equilibrium of ride-sourcing platforms and optimal government subsidies considering customers’ green preference under peak carbon dioxide emissions," International Journal of Production Economics, Elsevier, vol. 255(C).
    15. Wang, Qingwei & Zheng, Meimei & Lee, Ka-Man & Shi, Xiaoqian & Shen, Yichi & Pan, Ershun, 2024. "Optimal product and after-sales service decisions considering risk attitudes under price-dependent uncertain demand," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 182(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Li, Jizi & Ku, Yaoyao & Yu, Yue & Liu, Chunling & Zhou, Yuping, 2020. "Optimizing production of new energy vehicles with across-chain cooperation under China’s dual credit policy," Energy, Elsevier, vol. 194(C).
    2. Xiaoxue Zheng & Haiyan Lin & Zhi Liu & Dengfeng Li & Carlos Llopis-Albert & Shouzhen Zeng, 2018. "Manufacturing Decisions and Government Subsidies for Electric Vehicles in China: A Maximal Social Welfare Perspective," Sustainability, MDPI, vol. 10(3), pages 1-28, March.
    3. Gao, Yongling & Leng, Mingming & Zhang, Yaping & Liang, Liping, 2022. "Incentivizing the adoption of electric vehicles in city logistics: Pricing, driving range, and usage decisions under time window policies," International Journal of Production Economics, Elsevier, vol. 245(C).
    4. Mohammadzadeh, Narges & Zegordi, Seyed Hessameddin & Nikbakhsh, Ehsan, 2021. "Pricing and free periodic maintenance service decisions for an electric-and-fuel automotive supply chain using the total cost of ownership," Applied Energy, Elsevier, vol. 288(C).
    5. Yu, Yi & Zhou, Dequn & Zha, Donglan & Wang, Qunwei & Zhu, Qingyuan, 2021. "Optimal production and pricing strategies in auto supply chain when dual credit policy is substituted for subsidy policy," Energy, Elsevier, vol. 226(C).
    6. Cheng, Fei & Chen, Tong & Chen, Qiao, 2022. "Cost-reducing strategy or emission-reducing strategy? The choice of low-carbon decisions under price threshold subsidy," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 157(C).
    7. Yoo, Seung Ho & Choi, Thomas Y. & Sheu, Jiuh-Biing, 2021. "Electric vehicles and product–service platforms: Now and in future," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 149(C).
    8. Shifeng Han & Xingzhong Xu, 2018. "NEV supply chain coordination and sustainability considering sales effort and risk aversion under the CVaR criterion," PLOS ONE, Public Library of Science, vol. 13(6), pages 1-39, June.
    9. Li, Yina & Liang, Chenchen & Ye, Fei & Zhao, Xiande, 2023. "Designing government subsidy schemes to promote the electric vehicle industry: A system dynamics model perspective," Transportation Research Part A: Policy and Practice, Elsevier, vol. 167(C).
    10. Zhongwei Chen & Zhi-Ping Fan, 2023. "Improvement strategies of battery driving range in an electric vehicle supply chain considering subsidy threshold and cost misreporting," Annals of Operations Research, Springer, vol. 326(1), pages 89-113, July.
    11. Liangui Peng & Ying Li & Hui Yu, 2021. "Effects of Dual Credit Policy and Consumer Preferences on Production Decisions in Automobile Supply Chain," Sustainability, MDPI, vol. 13(11), pages 1-19, May.
    12. Zhang, Juan & Huang, Jian, 2021. "Vehicle product-line strategy under government subsidy programs for electric/hybrid vehicles," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 146(C).
    13. Yuan Shao & Xudong Deng & Qiankai Qing & Yajuan Wang, 2018. "Optimal Battery Recycling Strategy for Electric Vehicle under Government Subsidy in China," Sustainability, MDPI, vol. 10(12), pages 1-18, December.
    14. Sun, Ya-Fang & Zhang, Yue-Jun & Su, Bin, 2022. "Impact of government subsidy on the optimal R&D and advertising investment in the cooperative supply chain of new energy vehicles," Energy Policy, Elsevier, vol. 164(C).
    15. Tang, Yanyan & Zhang, Qi & Li, Yaoming & Li, Hailong & Pan, Xunzhang & Mclellan, Benjamin, 2019. "The social-economic-environmental impacts of recycling retired EV batteries under reward-penalty mechanism," Applied Energy, Elsevier, vol. 251(C), pages 1-1.
    16. Srivastava, Abhishek & Kumar, Rajeev Ranjan & Chakraborty, Abhishek & Mateen, Arqum & Narayanamurthy, Gopalakrishnan, 2022. "Design and selection of government policies for electric vehicles adoption: A global perspective," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 161(C).
    17. Huang, Weixiang & Zhu, Han, 2021. "Performance evaluation and improvement for ZEV credit regulation in a competitive environment," Omega, Elsevier, vol. 102(C).
    18. Deng, Shiming & Li, Wei & Wang, Tian, 2020. "Subsidizing mass adoption of electric vehicles with a risk-averse manufacturer," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 547(C).
    19. Ma, Haicheng & Lou, Gaoxiang & Fan, Tijun & Chan, Hing Kai & Chung, Sai Ho, 2021. "Conventional automotive supply chains under China's dual-credit policy: fuel economy, production and coordination," Energy Policy, Elsevier, vol. 151(C).
    20. Huang, Shuai & Fan, Zhi-Ping & Wang, Ningning, 2020. "Green subsidy modes and pricing strategy in a capital-constrained supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 136(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:transe:v:143:y:2020:i:c:s1366554520307420. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/600244/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.