[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/gam/jmathe/v9y2021i11p1280-d567552.html
   My bibliography  Save this article

Demand Subsidy versus Production Regulation: Development of New Energy Vehicles in a Competitive Environment

Author

Listed:
  • Zixuan Wang

    (School of Business Administration, South China University of Technology, Guangzhou 510640, China)

  • Xiuzhang Li

    (School of Business Administration, South China University of Technology, Guangzhou 510640, China)

Abstract
In the competitive market environment, the growth of new energy vehicles (NEVs) faces many obstacles. Demand subsidy or production regulation-related policies are widely used to promote the development of NEVs. A comparative analysis of the effects of the two types of policies on the competitive vehicle market requires further study. To fill this gap, we investigate which type of policy is more preferable from the perspective of the social planner. In this paper, we construct a Stackelberg game with a welfare-maximizing social planner and two profit-maximizing manufacturers producing NEVs and fuel vehicles (FVs), respectively. Interestingly, although both types of policies can increase the quantity of NEVs, demand subsidy also promotes the growth of total vehicles at the same time; in contrast, production regulation reduces the total vehicles. Moreover, compared with the benchmark that no policy intervention, demand subsidy generally improves social welfare, while production regulation improves social welfare only with high consumer preference for NEVs. Nevertheless, production regulation always has a positive impact on the environment, whereas demand subsidy may have a positive impact only when the NEV is very environment friendly. The numerical results show that consumer environmental preferences and the regulation of environmental impact determine which type of policy dominates the other.

Suggested Citation

  • Zixuan Wang & Xiuzhang Li, 2021. "Demand Subsidy versus Production Regulation: Development of New Energy Vehicles in a Competitive Environment," Mathematics, MDPI, vol. 9(11), pages 1-22, June.
    • Handle: RePEc:gam:jmathe:v:9:y:2021:i:11:p:1280-:d:567552
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7390/9/11/1280/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-7390/9/11/1280/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. 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.
    2. Al-Alawi, Baha M. & Bradley, Thomas H., 2014. "Analysis of corporate average fuel economy regulation compliance scenarios inclusive of plug in hybrid vehicles," Applied Energy, Elsevier, vol. 113(C), pages 1323-1337.
    3. 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).
    4. 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.
    5. 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.
    6. Melton, Noel & Axsen, Jonn & Goldberg, Suzanne, 2017. "Evaluating plug-in electric vehicle policies in the context of long-term greenhouse gas reduction goals: Comparing 10 Canadian provinces using the “PEV policy report card”," Energy Policy, Elsevier, vol. 107(C), pages 381-393.
    7. Yan Zhou & Michael Wang & Han Hao & Larry Johnson & Hewu Wang & Han Hao, 2015. "Plug-in electric vehicle market penetration and incentives: a global review," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 20(5), pages 777-795, June.
    8. Jenn, Alan & Azevedo, Inês L. & Ferreira, Pedro, 2013. "The impact of federal incentives on the adoption of hybrid electric vehicles in the United States," Energy Economics, Elsevier, vol. 40(C), pages 936-942.
    9. Diamond, David, 2009. "The impact of government incentives for hybrid-electric vehicles: Evidence from US states," Energy Policy, Elsevier, vol. 37(3), pages 972-983, March.
    10. Sarmistha R. Majumdar, 2005. "A Prospect Theory Analysis of California's Initiatives in Implementation of its Zero Emission Vehicles (ZEV) Mandate1," Review of Policy Research, Policy Studies Organization, vol. 22(2), pages 157-169, March.
    11. Hao, Han & Ou, Xunmin & Du, Jiuyu & Wang, Hewu & Ouyang, Minggao, 2014. "China’s electric vehicle subsidy scheme: Rationale and impacts," Energy Policy, Elsevier, vol. 73(C), pages 722-732.
    12. Sen, Burak & Noori, Mehdi & Tatari, Omer, 2017. "Will Corporate Average Fuel Economy (CAFE) Standard help? Modeling CAFE's impact on market share of electric vehicles," Energy Policy, Elsevier, vol. 109(C), pages 279-287.
    13. Faria, Ricardo & Marques, Pedro & Moura, Pedro & Freire, Fausto & Delgado, Joaquim & de Almeida, Aníbal T., 2013. "Impact of the electricity mix and use profile in the life-cycle assessment of electric vehicles," Renewable and Sustainable Energy Reviews, Elsevier, vol. 24(C), pages 271-287.
    14. Du, Jiuyu & Ouyang, Minggao & Chen, Jingfu, 2017. "Prospects for Chinese electric vehicle technologies in 2016–2020: Ambition and rationality," Energy, Elsevier, vol. 120(C), pages 584-596.
    15. Delucchi, Mark & Lipman, Timothy, 2001. "An Analysis of the Retail and Lifecycle Cost of Battery-Powered Electric Vehicles," Institute of Transportation Studies, Working Paper Series qt50q9060k, Institute of Transportation Studies, UC Davis.
    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. Yuchao Li & Lijie Zhang & Jiamin Liu & Xinpei Qiao, 2023. "Can the Dual-Credit Policy Help China’s New Energy Vehicle Industry Achieve Corner Overtaking?," Sustainability, MDPI, vol. 15(3), pages 1-22, January.
    2. Shuang Zhang & Yueping Du & Linxue Wang, 2024. "Using Consumer Loss Aversion to Investigate the Effect of Stackelberg Pricing for New-Energy Vehicles," Energies, MDPI, vol. 17(17), pages 1-22, September.
    3. Wenbin Wang & Jie Guan & Mengxin Zhang & Jinyu Qi & Jia Lv & Guoliang Huang, 2022. "Reward-Penalty Mechanism or Subsidy Mechanism: A Closed-Loop Supply Chain Perspective," Mathematics, MDPI, vol. 10(12), pages 1-22, June.
    4. Hongxia Chen & Jeongsoo Yu & Xiaoyue Liu, 2022. "Development Strategies and Policy Trends of the Next-Generation Vehicles Battery: Focusing on the International Comparison of China, Japan and South Korea," Sustainability, MDPI, vol. 14(19), pages 1-12, September.

    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. Mekky, Maher F. & Collins, Alan R., 2024. "The Impact of state policies on electric vehicle adoption -A panel data analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 191(C).
    2. Nie, Qingyun & Zhang, Lihui & Li, Songrui, 2022. "How can personal carbon trading be applied in electric vehicle subsidies? A Stackelberg game method in private vehicles," Applied Energy, Elsevier, vol. 313(C).
    3. 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.
    4. 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.
    5. Wang, Sinan & Zhao, Fuquan & Liu, Zongwei & Hao, Han, 2018. "Impacts of a super credit policy on electric vehicle penetration and compliance with China's Corporate Average Fuel Consumption regulation," Energy, Elsevier, vol. 155(C), pages 746-762.
    6. 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).
    7. Zhao, Dan & Ji, Shou-feng & Wang, He-ping & Jiang, Li-wen, 2021. "How do government subsidies promote new energy vehicle diffusion in the complex network context? A three-stage evolutionary game model," Energy, Elsevier, vol. 230(C).
    8. Feng, Jian & Yao, Yifan & Liu, Zhenfeng & Liu, Zhenling, 2024. "Electric vehicle charging stations' installing strategies: Considering government subsidies," Applied Energy, Elsevier, vol. 370(C).
    9. Ziwen Ling & Christopher R. Cherry & Yi Wen, 2021. "Determining the Factors That Influence Electric Vehicle Adoption: A Stated Preference Survey Study in Beijing, China," Sustainability, MDPI, vol. 13(21), pages 1-22, October.
    10. Kangda Chen & Fuquan Zhao & Han Hao & Zongwei Liu, 2018. "Synergistic Impacts of China’s Subsidy Policy and New Energy Vehicle Credit Regulation on the Technological Development of Battery Electric Vehicles," Energies, MDPI, vol. 11(11), pages 1-19, November.
    11. Wu, Fulan & Li, Pei & Dong, Xuebing & Lu, Yuanzhu, 2022. "Exploring the effectiveness of China's dual credit policy in a differentiated automobile market when some consumers are environmentally aware," Energy Economics, Elsevier, vol. 111(C).
    12. Wu, Tian & Shang, Zhe & Tian, Xin & Wang, Shouyang, 2016. "How hyperbolic discounting preference affects Chinese consumers’ consumption choice between conventional and electric vehicles," Energy Policy, Elsevier, vol. 97(C), pages 400-413.
    13. Du, Jiuyu & Meng, Xiangfeng & Li, Jianqiu & Wu, Xiaogang & Song, Ziyou & Ouyang, Minggao, 2018. "Insights into the characteristics of technologies and industrialization for plug-in electric cars in China," Energy, Elsevier, vol. 164(C), pages 910-924.
    14. Zhuge, Chengxiang & Wei, Binru & Shao, Chunfu & Shan, Yuli & Dong, Chunjiao, 2020. "The role of the license plate lottery policy in the adoption of Electric Vehicles: A case study of Beijing," Energy Policy, Elsevier, vol. 139(C).
    15. Jizi Li & Yuping Zhou & Dengke Yu & Chunling Liu, 2020. "Consumers’ Purchase Intention of New Energy Vehicles: Do Product-Life-Cycle Policy Portfolios Matter?," Sustainability, MDPI, vol. 12(5), pages 1-23, February.
    16. Lian Ding & Xiaodong Zhu, 2023. "The Impact of the Dual-Credit Policy on Production and Cooperative R&D in the Automotive Supply Chain," Sustainability, MDPI, vol. 15(2), pages 1-18, January.
    17. Yan, Shiyu, 2018. "The economic and environmental impacts of tax incentives for battery electric vehicles in Europe," Energy Policy, Elsevier, vol. 123(C), pages 53-63.
    18. Shang, Wen-Long & Zhang, Junjie & Wang, Kun & Yang, Hangjun & Ochieng, Washington, 2024. "Can financial subsidy increase electric vehicle (EV) penetration---evidence from a quasi-natural experiment," Renewable and Sustainable Energy Reviews, Elsevier, vol. 190(PA).
    19. Zhang, Lei & Qin, Quande, 2018. "China’s new energy vehicle policies: Evolution, comparison and recommendation," Transportation Research Part A: Policy and Practice, Elsevier, vol. 110(C), pages 57-72.
    20. 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.

    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:gam:jmathe:v:9:y:2021:i:11:p:1280-:d:567552. 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: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    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.