This article analyzes a Fuel Automobile (FA) supply chain and an electric-and-fuel automobile supply chain in a duopoly setting, under a government's subsidy incentive scheme that is implemented to promote the use of Electric Automobiles (EAs) for the control of air pollution. Benefiting from such a scheme, each EA consumer can enjoy a subsidy from the government. It is shown that the incentive scheme is more effective in increasing the sales of EAs when consumers' bargaining power is stronger. The impact of the incentive scheme on consumers' net surplus is the largest among all components in the social welfare. A higher subsidy may not result in a greater reduction in the environmental hazard. Moreover, a larger number of service and charging stations can reduce the negative impact of the incentive scheme on the FA market while enhancing its positive impact on the EA market. An incentive scheme with the centralized control with no subsidy is also considered and it is found that the incentive scheme is more effective in promoting EAs and protecting the environment.
|Number of pages||19|
|Early online date||11 Jan 2013|
|Publication status||Published - 2013|
Bibliographical noteFor this research, the first author (Jian Huang) was supported by both the National Natural Science Foundation of China under grant 70901036 and the Croucher Foundation Visitorship under grant SD163/0809/S, and the fourth author (Jian Liu) was supported by the National Natural Science Foundation of China under grants 70861002 and 71261006.
- Electric automobile
- government subsidy
- incentive scheme
- social welfare
- supply chain