Subsidizing a New Technology: An Impulse Stackelberg Game Approach
Utsav Sadana – Université de Montréal, Canada
Seminar in hybrid format at GERAD room 4488 or Zoom
Governments are motivated to subsidize profit-driven firms that manufacture zero-emission vehicles to ensure they become price-competitive. This paper introduces a dynamic Stackelberg game to determine the government's optimal subsidy strategy for zero-emission vehicles, taking into account the pricing decisions of a profit-maximizing firm. While firms have the flexibility to change prices continuously, subsidies are adjusted at specific time intervals. This is captured in our game formulation by using impulse controls for discrete-time interventions. We provide a verification theorem to characterize the Feedback Stackelberg equilibrium and illustrate our results with numerical experiments. (with Georges Zaccour)
Location
Pavillon André-Aisenstadt
Campus de l'Université de Montréal
2920, chemin de la Tour
Montréal Québec H3T 1J4
Canada