Energy-saving and subsidy policy decisions for double competition manufacturers

Abstract

With rising consumer environmental awareness (CEA) and strict carbon peak and carbon neutral targets, energy-intensive manufacturers are involving a fierce double competition in price and energy efficiency. However, their energy-saving and regulators' subsidy policy decisions are unclear. We addressed this gap here, where we have derived the manufacturers' optimal energy-saving decisions and have shown the effective conditions of the subsidy policy under three scenarios, including no difference, difference in unit original energy levels and difference in investment cost coefficients scenarios. Under the first scenario, we show the following: (1) those manufacturers in a weakly competitive environment should increase their unit energy saving, and counterintuitively, they should reduce it after the competitive intensity exceeds a threshold value; the increase in the CEA encourages the manufacturers to pursue a greater unit energy saving; (2) their profits are harmed by the increase in the competitive intensity; interestingly, the increase in the CEA is not always beneficial to those manufacturers; (3) The environmental concern degree of the regulator and society has a key impact on the effect of the subsidy policy. Under the latter two scenarios, many results depend on the manufacturers' type, such as dirty and clean manufacturers, outdated technology and advanced technology manufacturers.