Pricing Strategies Of Gasoline And Electric Vehicles Under Government Subsidy And Dual-Credit Policy

In recent years,in order to decrease the carbon emissions and oil consumption,many governments have introduced various policies,such as subsidies,tax relief and so on.On the one hand,subsidy policies greatly promote the development of electric vehicle(EV)industry;on the other hand,they also bring governments a greater fiscal burden.In response to this problem,some governments have introduced innovative policies such as China’s dual-credit policy.Governments implement various policies in the automobile market,which poses a severe challenge for automobile manufacturers to determine optimal pricing strategies.Nowadays,the market share of EVs is still low due to immature technologies.Thus,most automobile manufacturers produce both traditional energy vehicles and new energy vehicles.For these manufacturers,it is necessary to study how government subsidies and dual-credit policies affect manufacturers’ strategies and profits.At present,automobile manufacturers’pricing strategies under government policies have attracted attention of many scholars,and they study the effects of different policies on the automobile market,consumers and society.However,few scholars study the effects of government policies on enterprises from the perspective of automobile manufacturers.In addition,though some scholars study subsidy policies such as the mechanism design of subsidies,few scholars study the impact of dual-credit policy on enterprises,consumers and societies.In this paper,an automobile manufacturer’s pricing strategies under government subsidies and dual-credit policies are studied.The main work is as follows:(1)For the case of subsidy policy,the manufacturer’s optimal pricing strategies are studied.In this case,demand functions of gasoline vehicles(GVs)and EVs and a profit-maximizationIn this case,demand functions of gasoline vehicles(GVs)and EVs and a profit-maximization model of automobile manufacturer are developed.Through solving the model,we obtain optimal pricing strategies and profits of manufacturer under the subsidy policy.Furthermore,the factors affecting manufacturer’s pricing strategies and profits are analyzed.(2)For the case of dual-credit policy,the manufacturer’s optimal pricing strategies are studied.In this case,demand functions of GVs and EVs and a profit-maximization model of automobile manufacturer are developed.Through solving the model,we obtain optimal pricing strategies and profits of manufacturer under the dual-credit policy.Furthermore,the factors affecting manufacturer’s pricing strategies and profits are analyzed.(3)For the case of both subsidy policy and dual-credit policy,the automobile manufacturer’s optimal pricing strategies are studied.In this case,demand functions of GVs and EVs and a profit-maximization model of automobile manufacturer are developed.Through solving the model,we obtain optimal pricing strategies and profits of manufacturer under the subsidy policy and dual-credit policy.Furthermore,the factors affecting manufacturer’s pricing strategies and profits are analyzed.(4)The effects of government subsidies and dual-credit policy on the automobile manufacturer’s pricing strategies,production quantities of vehicles and the manufacturer’s profits are analyzed.We discuss the effects of the subsidy policy and dual-credit policy on the manufacturer by comparing the optimal pricing strategies and profits of automobile manufacturer under three cases:subsidy policy only,dual-credit policy only and both subsidy policy and dual-credit policy.In addition,some conclusions are validated by numerical analysis,and the manufacturer’s optimal profits in the three cases are analyzed.This paper obtains some important conclusions.First,the subsidy policy and dual-credit policy can help to decrease the price of EVs.Second,the subsidy policy and dual-credit policy can increase the production quantity of EVs,decrease the production quantity of gasoline vehicle(GV)and increase the manufacturer’s profit.Third,subsidies can help to increase the proportion of the production quantity of EVs.Last,Effects of dual-credit policy on the manufacturer’s profits depend on the setting of parameters of the policy.This study can enrich the research on the EV supply chain and provide some methods for related research.In addition,this paper discusses the effects of government subsidies and dual-credit policy on manufacturers that produce both GVs and EVs,especially the effects of dual-credit policy.This makes up for the lack of only analyzing subsidy policies.