Single or dual rollover? The product rollover strategy of an electric vehicle manufacturer with strategic consumers

Le résumé fourni par la source

Abstract Although it has been widely acknowledged that the positive effect of consumer subsidy on the development of the electric vehicle industry, its effect on product rollover strategy remains unknown. To address this issue, a two‐period model is conducted to determine the manufacturer's product rollover strategy choice between a single rollover (in which companies cease the production of the old version when launching a new upgraded version of a product) and a dual rollover (in which companies continue offering it at a discounted price), considering the consumer subsidy scheme and consumers’ strategic behavior. Our results show that in the low‐level innovation case, the manufacturer will benefit more from the single rollover strategy if the subsidy level of the old version is large but the subsidy level of the new version is small; when the old version's subsidy is small or the subsidy levels of the two versions are large, the manufacturer benefits more from the dual rollover strategy. In the high‐level innovation case, the manufacturer prefers the single rollover strategy if and only if the subsidy levels of the two versions are relatively large. Although the manufacturer can benefit from the single rollover strategy through consumer subsidy, it may increase the negative environmental impact and further, decrease social welfare. In addition, compared with the monopolistic setting, we find that the manufacturer becomes more willing to implement a single rollover in the competitive setting. Finally, the manufacturer is more likely to implement the single rollover strategy when more consumers are strategic.

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