A monopolistic supply chain model under price threshold government subsidy contract

Abstract

Utility of efficient automobiles has compelled us to explore various aspect of its promotion. Our manuscript analyzes a monopolistic automobile manufacturer trying to produce efficient vehicles along with traditional vehicles. A utility-based dynamic production design has been studied under price-dependent subsidy (PDS) model to explore the effects of government subsidy on manufacturing of Battery-operated vehicles (BOV) and Diesel vehicles (DV). We have compared the PDS mechanism under two sustainable and green strategies namely, BOV socially responsible (BSR) strategy and DV energy reduction (DER) strategy to bring out the best possible channel dynamics that can optimize its gross profit margins. We speculated that an increase in threshold price has positive impacts under BSR and DER strategies. However we found numerically and analytically that, even under subsidized BOV's, energy efficient DV's are still in much demand. Our study compels us to explore three different cost cases and the best possible optimal variant has been numerically established. We note that BSR strategy holds good in some circumstances while DER strategy rules in other. Our findings have been illustrated graphically by using real-life scenarios to validate our models.