How Does Carbon Trading Affect the Pricing Strategy of Automobile Companies? A Balancing Act of Optimizing Vehicles Pricing and Production Structures

Abstract

This paper studies the social-economic impacts of carbon trading on pricing management and the low-carbon behavior of automobile companies. We propose a game model between electric vehicles and gas-powered vehicles. Further, the influence of carbon trading on automobile selling price, sales volume, and sales profit are analyzed from the production mode of a certain company that only produces gas-powered vehicles. Our research contributes to the optimization of automotive companies' pricing, production management, and practices in the face of carbon emission quotas restrictions. The profit function was used to establish a game model for the single condition of producing only gas-powered vehicles, and the optimal sales price and profit of gas-powered vehicles were obtained by backward induction. (1) By adjusting the carbon limit, the government can promote the transformation of the automobile industry. (2) Carbon trading presents an opportunity for businesses with lower carbon emissions to mitigate the competitive disadvantage they face in the market.