Optimization of depreciation subsidy policy strategies for electric two-wheelers for improving traffic safety

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Abstract To improve the traffic safety of electric two-wheelers (ETW), China has promulgated ETW standardization policies. This policy requires local governments to take measures to guide the illegal ETWs out of use. Governments have implemented a depreciation subsidy scheme to encourage users to scrap illegal ETWs early. When designing the subsidy scheme, effectively improving the ETWs' traffic safety at the road network level while saving government expenses is essential for the sustainable implementation of the policy. This study proposes an optimization method for depreciation subsidy design incorporating traffic safety evaluation. Based on the policy scheme, this study formulates a risk assessment model for the ETW traffic network to characterize the effect of the subsidy on improving safety. Then, we use the bi-level programming approach to model the subsidy strategy design problem. The upper-level problem reflects the goal of policymakers to maximize safety improvement and minimize government expenses. The lower-level problem describes the route choices of ETW users. The optimal subsidy design under different safety-expense trade-offs is analysed based on the Nguyen and Dupuis network and a real network extracted from Changsha City in China. The results show that specific subsidy schemes effectively improve road safety without a large government spending. When the market price or service life of ETWs increases, the government spending on the same safety goal increases. The government should comprehensively consider the safety effect of financial expense and the situation of the local ETW market before selecting reasonable subsidy strategies.