IDEAS home Printed from https://ideas.repec.org/a/inm/orinte/v36y2006i2p118-125.html
   My bibliography  Save this article

Pricing for Environmental Compliance in the Auto Industry

Author

Listed:
  • Stephan Biller

    (Manufacturing Systems Research Laboratory, General Motors, 30500 Mound Road, Warren, Michigan 48090-9055)

  • Julie Swann

    (School of Industrial and Systems Engineering, Georgia Institute of Technology, 755 Ferst Drive, Atlanta, Georgia 30332-0205)

Abstract

For environmental and political reasons, governments have imposed fleetwide standards for emissions and fuel economy on automotive manufacturers. For example, the US government has imposed corporate average fuel economy (CAFE) regulations on manufacturers for their vehicles sold in the United States. When these standards run contrary to consumer preferences or when technology advances fail to deliver anticipated benefits, manufacturers may use price as a short-term strategy to encourage consumers to switch to vehicles that help the firm to achieve fleetwide compliance. We developed a mathematical model to coordinate price with production decisions while meeting fleetwide standards, market share, and production-capacity constraints. To incorporate substitutability of products, we created a demand model that uses consumers’ second-choice preferences and linear demand curves.

Suggested Citation

  • Stephan Biller & Julie Swann, 2006. "Pricing for Environmental Compliance in the Auto Industry," Interfaces, INFORMS, vol. 36(2), pages 118-125, April.
    • Handle: RePEc:inm:orinte:v:36:y:2006:i:2:p:118-125
    DOI: 10.1287/inte.1050.0174
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/inte.1050.0174
    Download Restriction: no
    File URL: https://libkey.io/10.1287/inte.1050.0174?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ioannis Bellos & Mark Ferguson & L. Beril Toktay, 2017. "The Car Sharing Economy: Interaction of Business Model Choice and Product Line Design," Manufacturing & Service Operations Management, INFORMS, vol. 19(2), pages 185-201, May.
    2. Volling, Thomas & Matzke, Andreas & Grunewald, Martin & Spengler, Thomas S., 2013. "Planning of capacities and orders in build-to-order automobile production: A review," European Journal of Operational Research, Elsevier, vol. 224(2), pages 240-260.
    3. Shiau, Ching-Shin Norman & Michalek, Jeremy J. & Hendrickson, Chris T., 2009. "A structural analysis of vehicle design responses to Corporate Average Fuel Economy policy," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(9-10), pages 814-828, November.

    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:inm:orinte:v:36:y:2006:i:2:p:118-125. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    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.