Optimal subsidy beneficiaries to promote electric vehicle adoption
Speaker:Feng Bo , Professor, Dean of the School of Business , Suzhou University
Host:Zeng Yan , Professor, Lingnan College
Time and Date:15:00, Oct. 19, 2023
Venue:Wong Ping-Lay Conference Room, Lingnan Hall (203)
Language: English + Chinese
Abstract:
Electric vehicles (EVs) are increasingly approved as a disruptive technology that can limit oil consumption and reduce carbon emissions. Recognizing this, governments worldwide are continuously offering subsidies to promote EV adoption. However, the issue of identifying optimal beneficiaries remains inadequately addressed due to some critical though unexplored aspects. One of the conspicuously missing aspects is whether channel structures make a difference in selecting optimal beneficiaries. In this paper, we develop a game-theoretic model to explore whom to subsidize (i.e., consumers, manufacturers, or both) to better realize the intended objectives under vayring distribution channels of EVs (from retail channels to direct channels). Our analysis reveals that optimal beneficiaries to reduce consumer expenditure are largely affected by the channel structure while relying on the manufacturer’s R&D efficiency and consumers’ expectation for government subsidy. We also extend our analysis to show that when beneficiaries are well-selected, the direct channel, in most cases, outperforms the retail channel in terms of consumer expenditure and manufacturer’s R&D level. As such, our analysis provides governors with advanced guidelines to select subsidy beneficiaries and compelling evidence to encourage direct selling.