Green Technology R&D Strategy Choices of Manufacturers Under Asymmetric Consumer Market

Abstract

In the automobile manufacturing industry, competitive manufacturers usually adopt independent R&D model, single-manufacturer R&D model, and investment-sharing R&D model to develop green technology products to meet consumer demand for green products and respond to the environmental challenges of global warming. However, there is an asymmetry in the consumer market among manufacturers. Some manufacturers have a larger consumer market, while others have a smaller one. This asymmetry intensifies the complexity of R&D model selection. We used game theory methods to conduct a comparative analysis of the three models. We came to the following conclusions: (1) Under the single manufacturing R&D model, the advantaged manufacturer (disadvantaged manufacturer) may not necessarily dominate product green technology R&D. Relatively small product substitutability will drive the product green technology R&D. When product substitutability is relatively moderate, the greater the market size advantage, the stronger the driving force for the advantaged manufacturer to dominate product green technology R&D. The smaller the market size advantage, the stronger the driving force for disadvantaged manufacturer to dominate product green technology R&D. (2) Compared with the single-manufacturer R&D model, the independent R&D model is a better choice. When product substitutability is relatively small, and the market size advantage is relatively large, the independent R&D model is relatively good. On the contrary, the single-manufacturer R&D model is better than the independent R&D model. At this time, whether the advantaged manufacturer or the disadvantaged manufacturer dominates product green technology R&D, competitors' profits will not necessarily be harmed. (3) Compared with the single-manufacturer R&D model, the investment-sharing R&D model will not damage the profits of the two competing manufacturers. However, compared with the independent R&D model, the investment-sharing R&D model is not always the better choice. When product substitutability and the cost-sharing ratio are relatively small, and market size advantage is relatively large, the investment-sharing R&D model is not the optimal choice under the advantaged manufacturer dominating product green technology R&D. When the product substitutability is relatively small, the cost-sharing ratio and the market size advantage are relatively large, the investment-sharing R&D model is also not the best choice under the disadvantaged manufacturer dominating product green technology R&D. Finally, the article suggests that competitive manufacturers should develop strategies suitable for themselves and the industry based on market size advantages and product substitutability when choosing R&D models.

Keywords: Independent R&D model; Single-manufacturer R&D model; Investment-sharing R&D model