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Article
Supply chain analysis under a price-discount incentive scheme for electric vehicles
European Journal of Operational Research
  • Chunlin LUO, Jiangxi University of Finance and Economics
  • Mingming LENG, Faculty of Business, Lingnan University
  • Jian HUANG
  • Liping LIANG, Faculty of Business, Lingnan University
Document Type
Journal article
Publication Date
5-16-2014
Keywords
  • Electric vehicle; Supply chain; Price discount; Incentive scheme
Abstract

We investigate an automobile supply chain where a manufacturer and a retailer serve heterogeneous consumers with electric vehicles (EVs) under a government’s price-discount incentive scheme that involves a price discount rate and a subsidy ceiling. We show that the subsidy ceiling is more effective in influencing the optimal wholesale pricing decision of the manufacturer with a higher unit production cost. However, the discount rate is more effective for the manufacturer with a lower unit production cost. Moreover, the expected sales are increasing in the discount rate but may be decreasing in the subsidy ceiling. Analytic results indicate that an effective incentive scheme should include both a discount rate and a subsidy ceiling. We also derive the necessary condition for the most effective discount rate and subsidy ceiling that maximize the expected sales of EVs, and obtain a unique discount rate and subsidy ceiling that most effectively improve the manufacturer’s incentive for EV production.

DOI
10.1016/j.ejor.2013.11.021
E-ISSN
18726860
Publisher Statement
Copyright © 2014 Elsevier B.V. All rights reserved. Access to external full text or publisher's version may require subscription.
Full-text Version
Accepted Author Manuscript
Citation Information
Luo, C., Leng, M., Huang, J., & Liang, L. (2014). Supply chain analysis under a price-discount incentive scheme for electric vehicles. European Journal of Operational Research, 235(1), 329-333. doi:10.1016/j.ejor.2013.11.021