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A Study on the Evolution of Competition in China’s Auto Market Considering Market Capacity Constraints and a Game Payoff Matrix: Based on the Dual Credit Policy

Author

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  • Ying Xie

    (School of Economics and Management, Jiangsu University of Science and Technology, Zhenjiang 212003, China)

  • Jie Wu

    (School of Economics and Management, Jiangsu University of Science and Technology, Zhenjiang 212003, China)

  • Hannian Zhi

    (School of Economics and Management, Jiangsu University of Science and Technology, Zhenjiang 212003, China)

  • Muhammad Riaz

    (School of Economics and Management, Jiangsu University of Science and Technology, Zhenjiang 212003, China)

  • Liangpeng Wu

    (Research Center of Risk Management and Emergency Decision Making, School of Management Science and Engineering, Nanjing University of Information Science and Technology, Nanjing 210044, China)

Abstract

The dual credit policy is currently the main starting point for China to achieve the green and sustainable development of the auto market. However, the policy’s impact on future market development remains unclear. It is necessary to consider the market capacity constraints and the market competition environment. By researching the impact of the dual credit policy on the micro-decision-making of automakers and the long-term evolution of the macro-auto market, the effect of the dual credit policy on the Chinese auto industry is obtained. This paper considers the market capacity constraint, combines the competitive relationship and game payment matrix between NEV makers and CFV makers, constructs a game model of the competition density between NEVs and CFVs, simulates the development and evolution of China’s auto market size, and analyzes the effect of the quantitative parameters of the dual credit policy on the auto market. The results show that: (1) the increase in NEV makers’ sale of credits will stimulate their production incentives, and the increase in conventional fuel vehicle (CFV) makers’ cost of purchasing credits will reduce their production incentives; (2) tightened fuel consumption standards for CFVs has an enhanced stimulating effect on the increase in the market share of NEVs, which can effectively reduce the market share of CFVs; (3) the price of credits facilitates the growth of the NEV market share, but credit prices that are too high do not stimulate the growth of the NEV market share to a significant degree; (4) the increase in the proportion of credits required for NEVs and the increase in the price of credits together help to reduce the market share of CFVs and increase the market share of NEVs.

Suggested Citation

  • Ying Xie & Jie Wu & Hannian Zhi & Muhammad Riaz & Liangpeng Wu, 2023. "A Study on the Evolution of Competition in China’s Auto Market Considering Market Capacity Constraints and a Game Payoff Matrix: Based on the Dual Credit Policy," Sustainability, MDPI, vol. 15(4), pages 1-24, February.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:4:p:3410-:d:1066796
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