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Game-Theoretic Analysis of Price and Quantity Decisions for Electric Vehicle Supply Chain Under Subsidy Reduction

Author

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  • Jinshi Cheng

    (Anhui Polytechnic University)

  • Jiali Wang

    (Anhui Polytechnic University)

  • Bengang Gong

    (Anhui Polytechnic University)

Abstract

To avoid the negative effects of electric vehicle (EV) subsidies, the Chinese government has launched an EV subsidy reduction policy, resulting in market uncertainty for EV supply chains. We study the optimal decisions of EV manufacturers and EV sellers by considering the subsidy reduction policy and stochastic demand of the EV market. We develop a newsvendor game model of a two-stage EV supply chain, and analyze how four factors—the degree of subsidy decline, the level of research and development (R&D), market demand, and inventory—affect the two parties’ optimal decisions under centralized and decentralized decision making. Our key results show that: (1) The EV subsidy reduction will not have a significant negative impact on the EV market; (2) The key factors for stimulating the development of the EV market are the R&D level and market demand for EVs, and EV sales are the major contributor to increased EV supply chain profits; (3) Improvement in EV market demand will increase market competition and market vitality; (4) The two decision maker-framework under centralized decision making is more advantageous to the popularization and development of EVs. When centralized decision making is difficult, a coordinated strategy under decentralized decision making can yield the same results as centralized decision making.

Suggested Citation

  • Jinshi Cheng & Jiali Wang & Bengang Gong, 2020. "Game-Theoretic Analysis of Price and Quantity Decisions for Electric Vehicle Supply Chain Under Subsidy Reduction," Computational Economics, Springer;Society for Computational Economics, vol. 55(4), pages 1185-1208, April.
    • Handle: RePEc:kap:compec:v:55:y:2020:i:4:d:10.1007_s10614-018-9856-z
    DOI: 10.1007/s10614-018-9856-z
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    References listed on IDEAS

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    Cited by:

    1. Yaxin Wang & Haoyu Wen & ZhongQuan Hu & Yuntao Zhang, 2023. "Collaborative Innovation Strategy of Supply Chain in the Context of MCU Domestic Substitution : A Differential Game Analysis," Computational Economics, Springer;Society for Computational Economics, vol. 61(3), pages 1039-1074, March.
    2. Jinglve Wang & Hongping Yuan, 2023. "Deciphering the Innovation Subsidy Puzzle: Government Choices amid Supply Chain Encroachment," Mathematics, MDPI, vol. 11(23), pages 1-38, November.
    3. Mu Li & Yingqi Liu & Weizhong Yue, 2022. "Evolutionary Game of Actors in China’s Electric Vehicle Charging Infrastructure Industry," Energies, MDPI, vol. 15(23), pages 1-20, November.

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    More about this item

    Keywords

    Supply chain management; Electric vehicle; Newsvendor game model; Subsidy reduction;
    All these keywords.

    JEL classification:

    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination

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