INVESTMENT AND COORDINATION STRATEGIES FOR FUEL CONSUMPTION REDUCTION IN A VEHICLE SUPPLY CHAIN UNDER GOVERNMENT SUBSIDIES

It develops a differential game model to investigate the issue of fuel consumption reduction investments and marketing cost coordination in a fuel vehicle supply chain to reduce carbon emissions. In this case, consumers have low fuel consumption preferences, and the government subsidizes ex -ante or ex -post the investments of supply chain firms. Accordingly, we propose two dynamic equations for fuel consumption reduction and goodwill of vehicles, as well as a demand function that accommodates consumers' low fuel preferences and automotive goodwill. Then, we analyze the different government subsidy models and supply chain marketing cost -sharing in four cases. The results show that both ex -ante and ex -post subsidies provide adequate incentives for fuel consumption reduction investments, but which subsidy policy is preferable depends on the parameter values; cost -sharing leads to increased marketing effort by retailers rather than reduced it; there is no correlation between the fuel consumption reduction investments and marketing effort; and the sharing contract of marketing costs leads to Pareto improvements that include the supply chain and society.