Are China's subsidies for electric vehicles effective?. (25th January 2020)

• Record Type: Journal Article
• Authors: Deng, Zhongqi; Tian, Peng
• Is Part Of: Managerial and decision economics. Volume 41:Number 4(2020)
• Page Start: 475
• Page End: 489
• Publication Date: 2020-01-25
• Subjects: Managerial economics -- Periodicals; Decision making -- Periodicals; Management -- Periodicals; 658.15
• DOI: 10.1002/mde.3114
• Languages: English
• ISSNs: 0143-6570

Abstract

Abstract : China has implemented high subsidy schemes to promote the adoption of electric vehicles. This study constructs an industrial organization model to theoretically analyze and numerically simulate the subsidy efficacy of battery electric vehicles in China. We find that subsidies for battery manufacturers and those for electric vehicle manufacturers are equivalent. Fixed subsidies are better for social welfare maximization than linear subsidies are. Simulation based on Chinese empirical data shows that China's subsidies for electric vehicles are effective but not optimal. It could be a better option overall to enable the vertical integration of the supply chain.