Evolutionary Game Analysis of the Production Decisions of Automakers in the Chinese Automobile Industry: A Tripartite Model of Government, Automakers, and Consumers

Abstract

Based on the evolutionary game approach, this paper analyzes how the automaker makes rational production decisions under the influence of the government and consumers. A tripartite evolutionary game model of “government-automaker-consumer” is established to explore the interactions under the condition of bounded rationality. The study shows that: 1) The increase of credit price and credit ratio will promote the diffusion of new energy vehicles (NEVs). 2) The cost premium of NEVs and the shrinking market will slow the spread of NEVs to some extent but will not prevent NEVs from becoming a trend in the automobile industry. However, the cost premium of fuel vehicles (FVs) will accelerate the development of the NEV industry. 3) Government subsidies can promote the development of NEV industry to some extent, but they are not always effective. The government can simultaneously implement subsidies for automakers and consumers in the early stages, and choose to implement the subsidy only for consumers in the medium term. Additionally, there is no need to implement the subsidy policy at a later stage.

Keywords

Dual-credit policy / new energy vehicles / tripartite evolutionary game / government subsidy

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