EURO 2024 Copenhagen
Abstract Submission

EURO-Online login

1691. Optimal Manufacturer Strategies and Government Intervention for AFV Transition under a Distributive Justice Perspective

Invited abstract in session WC-24: Game Theory in Sustainable Supply Chains, stream Sustainable Supply Chains.

Wednesday, 12:30-14:00
Room: 83 (building: 116)

Authors (first author is the speaker)

1. Wissam EL Hachem
Operations Management, EMLYON Business School

Abstract

Rising environmental awareness among consumers known as Consumer Environmental Awareness, led to the entry of green products into the car market. This led to the issue of competition between these green and non-green products which has been the subject of research lately. We focus on the pricing and the degree of greenness of a product in competition with an established non-green product while considering government intervention.
We build a model with two players, Government and Manufacturer, to focus on government intervention (taxes and subsidies) in the context of transition to Alternative Fuel Vehicles (AFV) under two scenarios. In one there is no Distributive Justice (DJ), and in the other DJ enters by modifying the social pillar in the government’s utility to maximize consumer’s access to vehicles. The government’s tax and subsidy override the manufacturer’s prices when determining the dynamics highlighting the decisiveness of government intervention in such a setting. The dynamics of the environmental and economic pillars show tradeoffs which are partially alleviated when we consider DJ. We show that when introducing DJ into the model, there is no Pareto front where all three pillars improve simultaneously and the government’s utility remains more or less the same. The manufacturer’s profits and consumer surplus exhibit a harmonious relationship whereby they increase together. Finally, the demand for AFV is always cannibalizing the demand for ICE.

Keywords

Status: accepted

Back to the list of papers