Consumer Subsidies with a Strategic Supplier: Commitment vs. Flexibiliy

被引:106
作者
Chemama, Jonathan [1 ]
Cohen, Maxime C. [2 ]
Lobel, Ruben [3 ]
Perakis, Georgia [4 ]
机构
[1] Ecole Cent Paris, F-91190 Paris, France
[2] NYU, Stern Sch Business, New York, NY 10012 USA
[3] Airbnb, San Francisco, CA 94103 USA
[4] MIT, MIT Sloan Sch Management, 77 Massachusetts Ave, Cambridge, MA 02139 USA
基金
美国国家科学基金会;
关键词
government subsidies; strategic supplier; newsvendor; commitment; DEMAND; IMPACT; PROCUREMENT; INFORMATION; POLICIES; GREEN;
D O I
10.1287/mnsc.2017.2962
中图分类号
C93 [管理学];
学科分类号
12 ; 1201 ; 1202 ; 120202 ;
摘要
Governments use consumer incentives to promote green technologies (e.g., solar panels and electric vehicles). Our goal in this paper is to study how policy adjustments over time will interact with production decisions from the industry. We model the interaction between a government and an industry player in a two-period game setting under uncertain demand. We show how the timing of decisions affects the risk sharing between the government and the supplier, ultimately affecting the cost of the subsidy program. In particular, we show that when the government commits to a fixed policy, it encourages the supplier to produce more at the beginning of the horizon. Consequently, a flexible subsidy policy is on average more expensive, unless there is a significant negative demand correlation across time periods. However, we show that the variance of the total sales is lower in the flexible setting, implying that the government's additional spending reduces the adoption level uncertainty. In addition, we show that for flexible policies, the supplier is better off in terms of expected profits, whereas the consumers can either benefit or not depending on the price elasticity of demand. Finally, we test our insights with a numerical example calibrated on data from a solar subsidy program.
引用
收藏
页码:681 / 713
页数:33
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