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Adoption of Electric Vehicles: Manufacturers’ Incentive and Government Policy

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  • Jing Shao
  • Hangjun Yang
  • Anming Zhang

Abstract

In the literature, auto manufacturers’ incentives for adopting electric vehicles and their interactions with government policies are understudied, especially through an analytical approach. We develop a game-theoretic model to investigate what vehicle types should be produced from both private firms’ and social perspectives. We then propose an EV-subsidy/environmental-tax policy and derive the optimal policy parameters that maximise social welfare. The monopoly and duopoly markets are examined and compared, and it is shown that the government should charge a higher environmental tax, while offering a lower EV subsidy, in the duopoly market than in the monopoly market.

Suggested Citation

  • Jing Shao & Hangjun Yang & Anming Zhang, 2019. "Adoption of Electric Vehicles: Manufacturers’ Incentive and Government Policy," Journal of Transport Economics and Policy, University of Bath, vol. 53(2), pages 175-17-198.
    • Handle: RePEc:tpe:jtecpo:2019:53:2:175--198
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