Exploring the effectiveness of China's dual credit policy in a differentiated automobile market when some consumers are environmentally aware

Wu, Fan; Li, Pei; Dong, Xuebing; Lu, Yuanzhu

doi:10.1016/j.eneco.2022.106077

Cited by 22 publications

(6 citation statements)

References 29 publications

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“…of NEVs and CFVs are equal. However, referring to the article [ 40 ], we assume that new energy vehicles are more environmentally friendly and less damaging to the environment. Consumer’s willingness to pay is ν , where v ~ U [0,1], and due to the different environmental awareness of consumers, different valuations will be generated for new energy vehicles and conventional vehicles.…”

Section: Methodsmentioning

confidence: 99%

The impact of consumer preferences on the evolution of competition in China’s automobile market under the Dual Credit Policy—A density game based perspective

Xie,

Wu,

Zhou

et al. 2024

PLoS ONE

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The evolution of the automobile market is a macro-expression of the behavior of automakers’ production decisions. This study examines the competitive environment between new energy vehicles (NEVs) and conventional fuel vehicles (CFVs) and develops a game-theoretical model incorporating consumer utility, automaker profit, and the competitive density of NEVs and CFVs. It aims to assess how consumers’ preferences for vehicle range and smart features influence automakers’ strategic decisions and the broader market evolution under the Dual Credit Policy. The findings indicate: (1) A low NEV credit price facilitates NEV market size growth, but this growth rate diminishes beyond a certain price threshold; (2) The lower the consumer’s range preference, the higher NEV credit price can accelerate the development of new energy vehicles to their saturation value. However, when consumers in the market prioritize smart features, increasing the NEV credit price does not significantly influence the growth of NEV market size. (3) Higher consumer preferences for both range and smart features, combined with increased NEV credit prices, can synergistically accelerate the speed of the NEV market to reach the saturation value and also raise the saturation value of the scale of NEVs. And higher consumer range preference combined with increased NEV credit prices has a more significant effect on the promotion of NEV market size than the combined effect of higher consumer smart preference and increased NEV credit prices. The actual data of China’s automobile market is used in the simulation of this model. The model and its simulation results effectively explain and reveal the evolutionary impacts of consumers’ range and smart feature preference on the promotion of China’s NEVs under the Dual Credit Policy to provide effective technological and theoretical support for the promotion of the sustainable development of China’s NEV industry.

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Section: Methodsmentioning

confidence: 99%

The impact of consumer preferences on the evolution of competition in China’s automobile market under the Dual Credit Policy—A density game based perspective

Xie,

Wu,

Zhou

et al. 2024

PLoS ONE

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“…Furthermore, referring to relevant literature, for example, F. Wu et al (2022), Kim et al (2020), and Shen et al (2019), we assume that there are two types of consumers, green and neutral, and the proportion of green consumer is denoted as

α

while the neutral consumer's proportion is

1 - α

, where

α \in ((), 0, 1)

. Neutral consumers refer to individuals who exhibit a lack of specific attention or clear preferences towards the environmental attributes of products.…”

Section: Modelmentioning

confidence: 99%

“…That is, consumers derive a utility

v

from the consumption of two products and if the chosen product is classified as green, an additional utility increment of

ε + g_{j} θ

is observed by the green consumers (R. Guo et al, 2016; Shen et al, 2019; F. Wu et al, 2022). Here,

v

is consumer's base valuation for either firm's product,

p_{i} ((), p_{j})

is the price of firm i ( j )'s product,

θ

is the sensitivity of consumers to product greenness level and can be used to describe consumer's green preference, and

c

is interpreted as the degree of product's horizontal differentiation.…”

Section: Modelmentioning

confidence: 99%

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Timing and green decisions for competitive manufacturers under demand uncertainty and risk aversion

Li,

Tan

2024

Manage Decis Econ

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Leveraging real options theory, we have constructed a utility‐based model to examine the influence of uncertainty, risk aversion, and competition on the optimal entry timing for green manufacturers and traditional manufacturers, as well as the degree of greenness for follower products. Our analysis reveals that increased uncertainty and risk aversion enhance the value of investment opportunities for manufacturers, thereby raising their investment thresholds. Even though competition reduces the value of market entry for the leader compared to monopoly, its investment thresholds are unaffected by competition. More interestingly, consumer green preferences exhibit a non‐monotonic impact on green enterprise's entry timing.

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“…In fact, leading countries in EVs have implemented various incentive measures to help boost EV sales. These include fiscal incentives, licenses privileges, waivers of road access restrictions, lower toll or parking fees, the dual credit policy, lane access and fee exemptions (International Energy Agency (IEA), 2019; He et al, 2018;Yang et al, 2022a;Wu et al, 2022). Among those factors, subsidies are specifically identified as being essential for EVs to reach mass market (Eppstein et al, 2011;Hidrue et al, 2011).…”

Section: Introductionmentioning

confidence: 99%

Should electric vehicle subsidies phase down? An insight from the analysis of the increasingly competitive automobile market

et al. 2022

Front. Environ. Sci.

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Electric vehicles are expanding significantly in recent years. Policies have been critical in stimulating the growth of electric vehicle market. This paper focuses on subsidy policies for electric vehicle adoption in a horizontally differentiated goods market. Using a representative consumer model and assuming the duopoly firms compete in a Cournot fashion, we find that the optimal level of subsidies might not fall as a result of the decreasing production cost of electric vehicles. Instead, the subsidy might phase down when the government starts to bring more competition into the electric vehicle industry. This main result goes through irrespective of whether the subsidy is sales volume-based or sales revenue-based. Our numerical findings further suggest that welfare maximizing subsidy declines with an increasing competition among car manufacturers, and sales volume-based subsidy policy is more efficient than sales revenue-based one. In addition, we also find that the subsidy cut would reduce electric vehicle sales, and subsidy policy is responsive to the government’s objective function.

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Exploring the effectiveness of China's dual credit policy in a differentiated automobile market when some consumers are environmentally aware

Cited by 22 publications

References 29 publications

The impact of consumer preferences on the evolution of competition in China’s automobile market under the Dual Credit Policy—A density game based perspective

The impact of consumer preferences on the evolution of competition in China’s automobile market under the Dual Credit Policy—A density game based perspective

Timing and green decisions for competitive manufacturers under demand uncertainty and risk aversion

Should electric vehicle subsidies phase down? An insight from the analysis of the increasingly competitive automobile market

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