Pricing strategy for the automobile producer considering consumer anxiety behavior and policy substitution effect

Abstract

Trade-in program is a widely used way for recycling waste products. Similarly, a large number of automobile producers have launched trade-in-for new fuel cars or trade-in-for new energy vehicles to replacement consumers. We consider a two-period dynamic game problem and analyze the impact of the consumer anxiety behavior and the policy substitution effect on the customers' selection behavior, and the automobile producer's optimal pricing strategy. The results show that in the basic model, short-sighted customers' choices are diverse. In addition, both the consumer anxiety behavior and the policy substitution effect influence the producer's profit. In the extension models, it exists a threshold of the additional innovation level. When the additional innovation level is larger than the threshold value, automobile producers adopt the dynamic pricing strategy. Otherwise, they adopt the preannounce pricing strategy. Moreover, it exists a threshold of the additional innovation level. When it is larger than the threshold value, automobile producers adopt the single rollover strategy. Otherwise, they adopt the dual rollover strategy.