Impact of subsidy phase-out and credit trading policy tools on the competitive strategies of Chinese passenger car enterprises

Abstract

In the context of subsidy phase-out and the tightening of credit trading policy tools, enterprises producing internal combustion engine passenger cars have also started to produce new energy passenger cars, creating a competitive market with new energy passenger car enterprises. To explore the operation strategies and profit fluctuations of two enterprises in passenger car market and credit trading market, this paper develops a duopoly competition game model. Based on solving a multi-objective equilibrium problem, and performing numerical simulations with real data on Chinese passenger car market, this paper analyzes the interactive impact of policy tools on market competition. The conclusions point out that the numerical relationship between the price of positive new energy credits and credit deficit penalty is decisive to enterprises’ pricing strategies. As the subsidy recedes, the competitiveness of new energy passenger car enterprise will decline. The policy tools at corporate average fuel consumption credit regulation level only have a negative interactive effect on hybrid energy passenger car enterprise’s pricing and production strategy. There is a threshold for the difference between corporate average fuel consumption up-to-standard value and actual value, below which hybrid energy passenger car enterprise will produce more new energy passenger cars than internal combustion engine passenger cars. The tightening of policy tools at new energy credit regulation level will drive both enterprises to raise price and reduce yield.