Designing an intervention strategy for public-interest goods: The California electric vehicle market case |
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| Institution: | 1. University of Missouri – St. Louis, United States;2. Wake Forest University, United States;3. Naval Personnel Research Study and Technology, United States;4. Integral Analytics, United States;1. Department of Management Science, University of Strathclyde, 199 Cathedral Street, Glasgow G4 0QU, UK;2. Department of Management Science, University of Strathclyde, Glasgow, UK;3. School of Management, Curtin Business School, Curtin University, Perth, Australia;4. Curtin Graduate School of Business, Curtin University, Perth, Australia;1. Department of Business, Universitat Autònoma de Barcelona, Spain;2. Instituto de Investigaciones Económicas y Empresariales, Universidad Michoacana de San Nicolás de Hidalgo, Mexico;1. Institute of Food and Resource Economics, University of Copenhagen, Rolighedsvej 25, DK-1958 Frederiksberg C, Denmark;2. Danish Food Agency, Mørkhøj Bygade 19, DK-2860 Søborg, Denmark;3. Norwegian Agricultural Economics Research Institute, Storgata 2-4-6, P.O. Box 8024, NO-0030 Oslo, Norway;1. University of Washington, Seattle, WA 98195, USA;2. College of Business, Valparaiso University, 1909 Chapel Dr., Valparaiso, IN 46383, USA;3. School of Management, The University of Texas at Dallas, SM 40, 800 West Campbell Road, Richardson, TX 75080-3021, USA;4. OptTek Systems, Inc., 2241 17th Street, Boulder, CO 80302, USA;5. Sandia National Laboratories, P.O. Box 5800, Albuquerque, NM 87185-1138, USA |
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| Abstract: | We study the intervention problem for public-interest goods. Public-interest goods are known as goods with positive externalities, allowing the consumer as well as others who do not pay for them benefit from the consumption. Health related goods, such as vaccines, or products with less carbon emissions are well known examples. We consider a supply chain for such a product. Generally, wider adoption or usage of such goods is ensured by the intervention of a central authority in their supply chain. We explore the problem for a setting composed of a retailer and a central authority. The main goal of the central authority is to design and fund an intervention scheme so that decisions of the channel are in line with the good of society, specified as a social welfare function. We propose two intervention tools applied simultaneously: (1) investing in demand-increasing strategies, which affects the level of the stochastic demand in the market; and (2) rebates that affect revenue per unit received by the retailer. We introduce a model that determines a utility maximizing intervention scheme and further investigate the model. We also present two decentralized approaches as benchmarks. Finally, we conduct a case study for California׳s electric vehicle market and validate our findings by a detailed analysis of the results, including comparisons with the current practice. |
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| Keywords: | Newsboy problem Case study |
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