Abstract
With the raise of consumers’ environmental awareness, automobile manufacturers try to add production lines of new energy vehicles. This paper deals with pricing and investment decision issues of an automobile manufacturer for different types of cars. The consumers’ purchase preference for the new energy vehicle is formulated as a function of the manufacturer’s investment on facility and advertisement. Aiming to maximize the total profit of the manufacturer, we construct a decision model. By solving a differential equation, a necessary condition is proposed for guaranteeing that the manufacturer produces and sells both of the two types of vehicles. It is shown that both the consumers’ preference and the carbon tax affect the decisions of the manufacturer. For the possible scenarios in which the manufacturer only sells one kind of product, we present two simplified models. By comparing different achieved solutions, the optimal decision strategy is achieved. Finally, we show a numerical illustration to examine different decisions of the manufacturer under different sensitivity coefficients with regard to the investment. The main contribution of this paper is providing a jointly pricing and investment decision model under changeable consumers’ purchase preference, and revealing the influence factors of the automobile manufacturer’s transformation.
Highlights
With the development of economics, environmental concerns attract more and more attentions
ASSUMPTION AND NOTATIONS In this paper, pricing and investment decision issues of an automobile manufacturer for different types of vehicles are discussed in the presence of carbon tax
When the sensitivity coefficient of consumers’ purchase preference with regard to the investment is low or the production cost of a new energy vehicle is high, the manufacturer will certainly low the production quantity and the investment volume of the new energy vehicle, which coincides with the fact
Summary
With the development of economics, environmental concerns attract more and more attentions. [11] proposed a tri-level programming model involving a government, a new energy vehicle manufacturer and customers to investigate the manufacturer’s investment strategies, the government’s purchase subsidy policies and customers’ purchasing decisions. Despite the abundant literatures with regard to new energy vehicles, few considered how the automobile manufacturer transforms its product type for maximizing its expected profit. This paper discusses pricing and investment decision issues of an automobile manufacturer who possesses two types of production lines, i.e., traditional vehicle line and new energy vehicle line. This research covers some gaps for the existing literature Both pricing and investment strategies for two different types of automobiles are considered, and a jointly pricing and investment decision model is proposed. According to the obtained results, manufacturers could make decisions for pricing and investment before sales begins
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