The Fluctuating of Gasoline Price, the Herd Effect and the Marketing Strategy of Private-car Makers

Abstract

Abstract:

Based on the herd effect typical of private car consumption and the increasing use-cost of private cars as a result of higher gasoline price, this paper builds a differential game model of two firms offering quality differentiated private cars to analyze the impact of gasoline on the marketing strategy of private-car makers. The results show that:there is a threshold for the increase of gasoline price. Namely if gasoline price crosses the threshold, the carmakers' optimal dynamic prices decrease with the time; private-car makers' optimal dynamic pricing is sensitive to private car ownership and the sensitivity is lower for high-quality carmakers than it is for low quality carmakers; and with the increase of the herd effect coefficient and the decrease of the coefficient of the private car ownership effect on fuel consumption, the sensitivity of the private carmakers' optimal dynamic pricing to private car ownership increase; the relationship with the change of the gasoline price depends on the relative size of the herd effect coefficient and the coefficient of the private car ownership effect on fuel consumption.

Key words: the herd effect, gasoline, quality differentiation, private car, differential game, cities' traffic conditions

Shao Xiaoshuang, Tan Deqing. The Fluctuating of Gasoline Price, the Herd Effect and the Marketing Strategy of Private-car Makers[J]. , 2018, 30(10): 119-127.

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