The Usage Analysis and Policy Choice of CNG Taxis Based on a Multi-stage Dynamic Game Model

Abstract

The promotion and application of low-carbon energy has become a basic energy policy in China. In the taxi industry, the adoption of natural gas is a typical reflection of the use of low-carbon energy, however, the application of CNG taxis in practice is difficult because of the ignorance of consumer behaviour choices and the lack of consideration of the reforming and maintenance costs of CNG taxis in practical use during the implementation of this policy. In this paper, the construction of a multi-stage dynamic game model is proposed: this is used to analyse the complex dynamic relationships among consumers, the taxis, and the policy-making behaviours of government. By the means of backward induction, a conclusion is drawn such that government should determine the subsidy coefficientper unit of product as well as the carbon taxand the optimal reduction rate of carbon emissions confirmed by operators determination. Based on these, concerning the behavioural choices among consumers, taxis, and government, this paper draws five conclusions, which answer the problems concerning whether, or not, the government should levy a carbon tax and subsidise such operations as well as how much that financial levy and subsidy should be. Besides, this paper also makes a value judgment of the future format/mode of taxi operations. The study shows that, with the increasing subsidy, the competitive advantages of the CNG taxis are strengthened while the revenues of oil-fired taxis decrease constantly, which forces oil-fired taxis out of the market. At the same time, the service prices of both kinds of taxis are proportional to the money paid by consumers and the positive impacts of service prices on CNG taxis are greater than that on oil-fired taxis.The carbon tax standard set by government can play a proper role only if it gives consideration to the interests of both consumers and CNG taxis.